On September 1, Home Store sells a mower (that costs $310) for $610 cash with a one-year warranty that covers parts. Warranty expense is estimated at 9% of sales. On January 24 of the following year, the mower is brought in for repairs covered under the warranty requiring $43 in materials taken from the Repair Parts Inventory. Required:
Prepare the September 1 entry to record the mower sale (and cost of sale) and the January 24 entry to record the warranty repairs.

Sale of the mower sale (and cost of sale) and Warranty expense.

Date                  Details                                                  Debit                 Credit

September 1,     Cash                                                     $610

                          Sales                                                                             $610

September 1,     Cost of Goods sold                              $310

                           Finished goods inventory                                            $310

September 1,     Warranty expense                                $54.90

                           Warranty liability                                                       $54.90

January 24,       Warranty Liability                                    $43

                          Repair Parts Inventory                                               $43

Working

Warranty expense = 9% * 610 = $54.90

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