Refer
to data for Jupiter Corp. in BE13-20. Prepare entries for the warranty that
recognize the sale as a multiple deliverable with the warranty as a separate
service that Jupiter bundled with the selling price of the product.
Warranty
agreements similar to this are available separately, are estimated to have a
standalone value of $600,000, and are earned evenly over the warranty period.
Also prepare the entry(ies) to record the $63,000 expenditure for servicing the
warranty during 2011, and the adjusting entry required at year end, if any,
under the revenue approach.
|
2011
|
Cash, A/R, etc..................
|
2,500,000
|
|
|
|
Sales—Product..............
|
|
1,900,000
|
|
|
Unearned
Warranty Revenue..
|
|
600,000
|
|
|
|
|
|
|
12/31/11
|
Unearned Warranty Revenue.......
|
300,000
|
|
|
|
Warranty
Revenue...........
|
|
300,000
|
|
|
|
|
|
|
2011
|
Warranty Contract Expense.......
|
63,000
|
|
|
|
Accounts
Payable,
Accrued Payroll, etc...
|
|
63,000
|
|
|
|
|
|
