Sandhill Company sells televisions at an average price of $812 and also offers to each customer...

Sandhill Company sells televisions at an average price of $812 and also offers to each customer a separate 3-year warranty contract for $84 that requires the company to perform periodic services and to replace defective parts. During 2020, the company sold 282 televisions and 212 warranty contracts for cash. It estimates the 3-year warranty costs as $19 for parts and $29 for labor, and accounts for warranties separately. Assume sales occurred on December 31, 2020, and straight-line recognition of warranty revenues occurs. Record any necessary journal entries in 2020. (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.) Account Titles and Explanation Debit Credit SHOW LIST OF ACCOUNTS What liability relative to these transactions would appear on the December 31, 2020, balance sheet and how would it be classified? Sandhill Company Balance Sheet (Partial) : $ : $ SHOW LIST OF ACCOUNTS In 2021, Sandhill Company incurred actual costs relative to 2020 television warranty sales of $2,190 for parts and $4,360 for labor. Record any necessary journal entries in 2021 relative to 2020 television warranties. Use "Inventory" account to record the warranty expense. (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.) Account Titles and Explanation Debit Credit (To record the warranty revenue earned.) (To record the warranty expense.) SHOW LIST OF ACCOUNTS What amounts relative to the 2020 television warranties would appear on the December 31, 2021, balance sheet and how would they be classified? Sandhill Company Balance Sheet (Partial) : $ : $ SHOW LIST OF ACCOUNTS

Solutions

Expert Solution

Recorded all the transtions with details and journal

Balance Sheet partially prepared to show the item occured

	Recording or Journal entry fo the year 2020

1	Sales of 282 Televisions at an average price of $812 for cash
	Debit Account	Cash account with $(282 x 812) $228,984.00
	Credit Account	Sales account with $ 228,984.00

	Journal	Cash Account	DR	228,984.00
		To, Sales Account	CR		228,984.00

2	Sales of 212 3-years warranty contracts for $84 ; Warranty revenue will occurred straight-line recognition
	ie. Every year only 1/3 of the warranty amount will appear as revenue in accounts
	$(84/3)= $ 28 will appear as revenue in first year

	Debit Account	Cash account with $(212 x 28) $5,936.00
	Credit Account	Warranty Sales $ 5,936.00

	Journal	Cash Account	DR	5,936.00
		To, Warranty Sales Account	CR		5,936.00

3	And remaing amount of $(84-28)=$56 will treat as advance from customer as liabilities

	Debit Account	Cash account with $(212 x 56) $11,872.00
	Credit Account	Warranty Sales $ 11,872.00

	Journal	Cash Account	DR	11,872.00
		To, Advance from Customer Account	CR		11,872.00

4	Estimates the 3-year warranty costs as $19 for parts and $29 for labor
	As the estimated cost given, the actual cost not mentioned in the question
	ie. "No Entry" should be made in respest of this

	Journal	No Entry - Amount '0'


	List of Accounts:	1. Cash Account
		2. Sales Account
		3. Warranty Sales Account
		4. Advance from Customer

BALANCE SHEET as at December 31, 2020

Advance from Customer - $ 11,872.00
will appear in the Liability side of the balance sheet under Current Liabilities section

Sandhill Company Balance Sheet (Partial)
as at December 31, 2020
Liabilities	Amount ($)	Assets	Amount ($)

Capital Account		Fixed Assets

Loans		Investment

Curreent Liabilities		Loans & Advance
Advance from Customer	11,872.00

Provisions		Current Assets

ekkarill92 answered 1 year ago

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Subjects

	Recording or Journal entry fo the year 2021

1	Incurred actual costs relative to 2020 television warranty sales of $2,190 for parts
	It is not specified the actual expenses done in cash or credit,
	Let, assumed actual expenses for warranty sales made in cash

	Debit Account	Inventory with $2,190.00
	Credit Account	Cash $ 2,190

	Journal	Inventory	DR	2,190.00
		To, Cash Account	CR		2,190.00

2	and Incurred actual costs relative to 2020 television warranty sales $4,360 for labor.
	It is not specified the actual expenses done in cash or credit,
	Let, assumed actual expenses for warranty sales made in cash

	Debit Account	Labour Wages with $ 4,360.00
	Credit Account	Cash $ 4,360.00

	Journal	Labour Wages Account	DR	4,360.00
		To, Cash Account	CR		4,360.00


3	Warranty contracts Sales of 2020, Recognition in the year 2021