6) R. Milton Products Inc. generated sales for the current month of 200 units at $225 each, subject to sales tax of 7.5%. All sales are on account. Each unit carries a 6-month warranty. R. Milton Products Inc. promises to repair the unit should it become defective. The estimated cost to the company to honour the warranty is $60 and past experience has shown that approximately 7% of all units will have to be repaired during the warranty period. Prepare journal entries for the following transactions: a. Record sales for the current month including the taxes collected in the revenue account. b. Record the estimated warranty liability associated with the current month's sales. c. Adjust the revenue account for the proper amount of sales tax payable.

6) R. Milton Products Inc. generated sales for the current month of 200 units at $225 each, subject to sales tax of 7.5%. All sales are on account. Each unit carries a 6-month warranty. R. Milton Products Inc. promises to repair the unit should it become defective. The estimated cost to the company to honour the warranty is $60 and past experience has shown that approximately 7% of all units will have to be repaired during the warranty period. Prepare journal entries for the following transactions: a. Record sales for the current month including the taxes collected in the revenue account. b. Record the estimated warranty liability associated with the current month's sales. c. Adjust the revenue account for the proper amount of sales tax payable.

CONCEPTS IN FED.TAX.,2020-W/ACCESS

20th Edition

ISBN:9780357110362

Author:Murphy

Publisher:Murphy

Chapter2: Income Tax Concepts

Section: Chapter Questions

Problem 62P

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