Chapter 4
Current Liabilities
198
b) During the year 2016, the company used $200 worth of inventory parts and paid $100
cash for staff salaries toward warranty claims. Prepare a journal entry to record this
transaction.
Date
Account Title and Explanation
Debit
Credit
AP-15B (
7
8
)
Spinicker sells in-home stereo systems. The corporation also sells a four-year warranty
contract as a separate service. Spinicker sold 40,000 warranty contracts at $100 each in 2016.
Spinicker recognizes warranty revenue evenly over the warranty period.
Required
a) Prepare a journal entry on December 31, 2016 to record the sale of the warranty contracts
for the year.
Date
Account Title and Explanation
Debit
Credit
