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24 January, 04:14

New Age Computers manufactures and sells pagers and radio paging systems which include a 180 day warranty on product defects. It also sells an extended warranty which provides an additional two years of protection. On May 10, it sold a paging system for $4,500 and an extended warranty for another $1,400. The journal entry to record this transaction would include:

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  1. 24 January, 05:27
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    Given that,

    sold a paging system = $4,500

    Sold extended warranty = $1,400

    The journal entry to record this transaction would include:

    (i) cash account Dr. $4,500

    To Sales A/c $4,500

    (To record the sales)

    (ii) Cash A/c Dr. $1,400

    To Unearned revenue A/c $1,400

    (To record the service revenue)
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