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Wildhorse Corporation sells computers under a 2-year warranty contract that requires the corporation to replace...

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Accounting

Wildhorse Corporation sells computers under a 2-year warranty contract that requires the corporation to replace defective parts and to provide the necessary repair labor. During 2020, the corporation sells for cash 364 computers at a unit price of $2,380. On the basis of past experience, the 2-year warranty costs are estimated to be $160 for parts and $200 for labor per unit. (For simplicity, assume that all sales occurred on December 31, 2020.) The warranty is not sold separately from the computer.

Record any necessary journal entries in 2020:

dr. Cash

 866320
dr. Warranty Expense 131040
cr. Sales Revenue 866320
cr. Warranty Liability 131040

In 2021, the actual warranty costs to Wildhorse Corporation were $20,400 for parts and $41,800 for labor. Record any necessary journal entry in 2021

dr. Warranty Liability xxx
cr. ??? xxx
cr. Inventory xxx

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