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Problem
Early in 2017, ivanhoe Equipment Company sold 600 Rollomatics during 2017 at $5,400 each. During 2017, Ivanhoe spent $21,000 servicing the 2 years assurance
Warranties that accompany the Rollomantic. All applicable transactions are on cash basis.
Prepare 2017 entries for Ivanhoe. Assume that ivanhoe estimates the total cost of servicing the warranties will be $52,000 for 2 years.
Prepare 2017 entries for Ivanhoe assuming that the warranties are not an integral part of the sale (a service-type warranty). Assume that of the sales total, 53,000 relates to sales of warranty contracts. Ivanhoe estimates the total cost of servicing the warranties will be $ 52,000 for 2 years . Estimates revenues to be recognize on a straight line basis.
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