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Amazon sells copiers that come with a 2-year warranty contract that requires them to fix any...

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Accounting

Amazon sells copiers that come with a 2-year warranty contractthat requires them to fix any defects during the warranty period.During 2018, Amazon sells 600 copiers for $4,000 each. During 2018,Amazon spent $30,000 servicing these warranties. During 2019,Amazon spent $100,000 servicing these warranties.

a) Record any necessary journal entries related to the sale ofthe copiers and the warranties for both 2018 and 2019. Amazonestimates that the total cost of the 2-year warranties will be$150,000.

b) How would the liability related to these warranties bepresented on the 2018 balance sheet?

Answer & Explanation Solved by verified expert
4.3 Ratings (687 Votes)
Solution Part a Journal Entries Date General Journal Debit Credit Year 2018 Accounts Receivable 2400000 Sales Revenue 600 Copier4000 each 2400000 To record sales for year 2018 Year 2018 Warranty Expenses 150000 Estimated Warranty Liability 150000 To record estimated warranty liability for 2 years    See Answer
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Transcribed Image Text

Amazon sells copiers that come with a 2-year warranty contractthat requires them to fix any defects during the warranty period.During 2018, Amazon sells 600 copiers for $4,000 each. During 2018,Amazon spent $30,000 servicing these warranties. During 2019,Amazon spent $100,000 servicing these warranties.a) Record any necessary journal entries related to the sale ofthe copiers and the warranties for both 2018 and 2019. Amazonestimates that the total cost of the 2-year warranties will be$150,000.b) How would the liability related to these warranties bepresented on the 2018 balance sheet?

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