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Question - Justice Company sold 150 color laser copiers in Year 5 for $4,000 each, together with a one-year warranty. Maintenance on each copier during the warranty period is estimated to average $300 ($100 for parts and $200 for labor).
Required -
1. Create entries to record the sale of the copiers and the related warranty costs, assuming that the accrual method is used. Actual warranty costs incurred in Year 5 were $17,000 ($5,667 for parts and $11,333 for labor).
2. On the basis of the above data, prepare the appropriate entries for Year 5 assuming the cash-basis method is used.
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