Question - Sheryl Crow Equipment Company sold 558 Rollomatics during 2014 at $6,740 each. During 2014, Crow spent $38,000 servicing the 2-year warranties that accompany the Rollomatic. All applicable transactions are on a cash basis.
Prepare 2014 entries for Crow using the expense warranty approach. Assume that Crow estimates the total cost of servicing the warranties will be $190,000 for 2 years.