On December 31, 2026, Dieker Company sells equipment to Tabor Inc. for $125,000. Dieker includes a 1-year assurance warranty service with the sale of all its equipment. The customer receives and pays for the equipment on December 31, 2026. Dieker estimates the prices to be $122,000 for the equipment and $3,000 for the cost of the warranty. In addition to the assurance warranty, Dieker sold an extended warranty (service type warranty) for an additional 2 years (20x2-20x3) for $2,000. Prepare the journal entry to record this transaction on December 31, 20x1.

Warranty: It implies a guarantee or a kind of promise made by the seller to the buyer related to the…

Answered: On December 31, 2026, Dieker Company sells equipment to Tabor Inc. for $125,000. Dieker includes a 1-year assurance warranty service with the sale of all its…

FINANCIAL ACCOUNTING

10th Edition

ISBN: 9781259964947

Author: Libby

Publisher: MCG

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On December 31, 2026, Dieker Company sells equipment to Tabor Inc. for $125,000. Dieker
includes a 1-year assurance warranty service with the sale of all its equipment. The
customer receives and pays for the equipment on December 31, 2026. Dieker estimates the
prices to be $122,000 for the equipment and $3,000 for the cost of the warranty.
In addition to the assurance warranty, Dieker sold an extended warranty (service type
warranty) for an additional 2 years (20x2-20x3) for $2,000.
Prepare the journal entry to record this transaction on December 31, 20x1.

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