E13-11

a.

Cash 3,000,000 Sales 3,000,000
(To record the sale of 500 Rollomatics at $6,000 each)

Warranty Expense 20,000 Cash 20,000

Warranty Expense 100,000 Estimated Liability Under Warranties 100,000
($120,000 - $20,000 = $100,000)

b.

Cash 3,000,000 Sales 2,850,000 Unearned Warranty Revenue 150,000

Warranty Expense 20,000 Cash 20,000

Unearned Warranty Revenue 25,000 Warranty Revenue 25,000
($150,000 * (20,000/120,000) = $100,000)

E13-12

Inventory Premiums 7,040 Cash 7,040
(8,800 * 0.80 = $7,040)

Cash 363,000 Sales 363,000
(To record the sale of 110,000 boxes of soap powder at $3.30 each)

Premium Expense 3,520 Inventory Premiums 3,520
[(44,000/10) * 0.80 = $3,520]

Premium Expense 1,760 Estimated Liability Premiums 1,760
([(110,000 * 0.60) – 44,000]/10 * 0.80 = $1,760)

P13-9

a.

2014

Inventory Premium MP3 codes 562,500 Cash 562,500
(To record purchase of 250,000 MP3 codes at $2.25 each)

Cash 868,620 Sales 868,620
(To record the sale of 2,895,400 candy bars at $0.30 each)

Cash [(1,200,000/5) * $2.50] 600,000
Premium Expense 60,000 Inventory of Premiums [(1,200,000/5) * ($2.25 + $0.50)] 660,000
(To record the premium expense associated with the sale)

Premium Expense [(290,000/5) * (2.75 – 2.50)] 14,500 Estimated Liability for Premiums 14,500
(To record the estimated liability for premium claims outstanding 12/31/14)

2015

Inventory Premium MP3 codes 742,500 Cash 742,500
(To record purchase of 330,000 MP3 codes at $2.25 each)

Cash 823,080 Sales