PB Modified LO Warranties Treanor Company sells a machine for $ under a month
warranty agreement that requires the company to replace all defective parts and to provide the repair
labor at no cost to the customers. Traenor Company incurred $ of costs to manufacture the
machines. With sales being made evenly throughout the year, the company sells machines in
and estimates that half of the warrantied work is completed in and half is completed in As a
result of product testing, the company estimates that the warranty cost is $ per machine $ parts
and $ labor
Instructions
Assuming that actual warranty costs are incurred exactly as estimated, what journal entries would be
made relative to the following facts?
a Sale of machinery in and all expenses matched to this revenue.
b Warrantied work completed in
c Warrantied work completed in
d What amount, if any, is disclosed in the balance sheet as a liability for future warranty costs as
of December
