Estimate revenues to be recognized on a straight-line basis

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Reference no: EM131763788

Question: Early in 2017, Buffalo Equipment Company sold 500 Rollomatics during 2017 at $6,500 each. During 2017, Buffalo spent $21,000 servicing the 2-year assurance warranties that accompany the Rollomatic. All applicable transactions are on a cash basis.

Prepare 2017 entries for Buffalo. Assume that Buffalo estimates the total cost of servicing the warranties will be $60,000 for 2 years. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Date	Account	Debit	Credit
At Sale	Cash	3,250,000
	Sales Revenue		3,250,000

During 2017	Warranty Expense	21,000
	Cash, Supplies, Wages		21,000

Dec 31, 2017	Warranty Expense	39,000
	Warranty Liability		39,000

Prepare 2017 entries for Buffalo assuming that the warranties are not an integral part of the sale (a service-type warranty). Assume that of the sales total, $61,000 relates to sales of warranty contracts. Buffalo estimates the total cost of servicing the warranties will be $60,000 for 2 years. Estimate revenues to be recognized on a straight-line basis. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually. Round intermediate calculations to 5 decimal places, e.g. 1.54657 answers to 0 decimal places, e.g. 5,125.)

Date	Account	Debit	Credit
At Sale	Cash	3,250,000
	Unearned Warranty Revenue	?	?
	Sales Revenue	?	?
During 2017	Warranty Expense	?	?
	Cash, Supplies, Wages	?	?
Dec. 31, 2017	Unearned Warranty Revenue	?	?
	Warranty Revenue (to record warranty revenue)	?	?
	Warranty Expense	?	?
	Warranty Liability (to record warranty liability)	?	?

Reference no: EM131763788

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