ABC company sells exercise machines for home use. the machines carry a 2- year warranty. past experience indicates that 6% of the units sold will be returned during the warranty period for repairs. the average cost of repairs under warranty is $60 for labour andd $90 for parts per unit. during 2010, 2,500 exercise machines were sold at an average price of $800. during the year, 60 of the machines that were sold were repaired at the average price per unit. Instructions: a) prepare the journal entry to record the repairs made under warranty. b) prepare the journal entry to record the estimated warranty expense for the year.
ABC company sells exercise machines for home use. the machines carry a 2- year warranty. past experience indicates that 6% of the units sold will be returned during the warranty period for repairs. the average cost of repairs under warranty is $60 for labour andd $90 for parts per unit. during 2010, 2,500 exercise machines were sold at an average price of $800. during the year, 60 of the machines that were sold were repaired at the average price per unit. Instructions: a) prepare the journal entry to record the repairs made under warranty. b) prepare the journal entry to record the estimated warranty expense for the year.
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter9: Current Liabilities And Contingent Obligations
Section: Chapter Questions
Problem 10RE
Related questions
Question
ABC company sells exercise machines for home use. the machines carry a 2- year warranty. past experience indicates that 6% of the units sold will be returned during the warranty period for repairs. the average cost of repairs under warranty is $60 for labour andd $90 for parts per unit. during 2010, 2,500 exercise machines were sold at an average price of $800. during the year, 60 of the machines that were sold were repaired at the average price per unit.
Instructions:
a) prepare the
b) prepare the journal entry to record the estimated warranty expense for the year.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 4 steps with 4 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:
9781337788281
Author:
James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:
Cengage Learning
Financial Accounting: The Impact on Decision Make…
Accounting
ISBN:
9781305654174
Author:
Gary A. Porter, Curtis L. Norton
Publisher:
Cengage Learning
Principles of Accounting Volume 1
Accounting
ISBN:
9781947172685
Author:
OpenStax
Publisher:
OpenStax College
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:
9781337788281
Author:
James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:
Cengage Learning
Financial Accounting: The Impact on Decision Make…
Accounting
ISBN:
9781305654174
Author:
Gary A. Porter, Curtis L. Norton
Publisher:
Cengage Learning
Principles of Accounting Volume 1
Accounting
ISBN:
9781947172685
Author:
OpenStax
Publisher:
OpenStax College
Principles of Accounting Volume 2
Accounting
ISBN:
9781947172609
Author:
OpenStax
Publisher:
OpenStax College