Hunter Appliances sells refrigerators for $1,500, which includes a two-year warranty that requires the company to perform periodic services and to replace defective parts. During 2021, Hunter sold 700 refrigerators. Based on past experience, the company has estimated that the total two-year warranty costs are $95 per appliance. In 2022, Hunter incurred actual warranty costs related to its 2021 sales of $11,500. Required: Prepare the journal entries related to the warrant for 2020 and 2021.
Hunter Appliances sells refrigerators for $1,500, which includes a two-year warranty that requires the company to perform periodic services and to replace defective parts. During 2021, Hunter sold 700 refrigerators. Based on past experience, the company has estimated that the total two-year warranty costs are $95 per appliance. In 2022, Hunter incurred actual warranty costs related to its 2021 sales of $11,500. Required: Prepare the journal entries related to the warrant for 2020 and 2021.
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
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Hunter Appliances sells refrigerators for $1,500, which includes a two-year warranty that requires the company to perform periodic services and to replace defective parts. During 2021, Hunter sold 700 refrigerators. Based on past experience, the company has estimated that the total two-year warranty costs are $95 per appliance.
In 2022, Hunter incurred actual warranty costs related to its 2021 sales of $11,500.
Required:
Prepare the
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