Baxter incorporated manufactures and sells heating and air

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Baxter Incorporated manufactures and sells Heating and Air Conditioning Units for large industrial buildings and uses. Baxter offers their customers a one year warranty on all products sold. Customers can also purchase a five year warranty on their heating and air conditioning unit that were purchased. SUNY Oswego was doing renovations to their campus and had the need for two large heating and air conditioning units. On January 2, 2007, SUNY Oswego contracted with Baxter Incorporated to purchase these units at a cost of $240,000. SUNY Oswego was aware of the one year warranty but also decided to purchase the additional five year warranty. Baxter Incorporated received $75,000 from SUNY Oswego for the warranties on the two heating and air conditioning units.

Determine the journal entries to record the purchase, one year warranty and five year warranty. In addition, determine journal entries for any aspect of the transaction that should be recorded for that year (assume the sale was made by credit).

Reference no: EM13584890

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