In 2020, Pluto Company started selling new computer that carried a 2-year warranty against defects. Based on the manufacturer's recommendations, the entity estimated warranty cost as a percentage of sales. First year of warranty - 3% Second year of warranty - 9% 2020 2021 Sales 5,000,000 7,000,000 Actual warranty repairs 100,000 250,000 Prepare the necessary journal entries to record this transaction, using the expense as incurred approach, for the years 2020 and 2021.
In 2020, Pluto Company started selling new computer that carried a 2-year warranty against defects. Based on the manufacturer's recommendations, the entity estimated warranty cost as a percentage of sales. First year of warranty - 3% Second year of warranty - 9% 2020 2021 Sales 5,000,000 7,000,000 Actual warranty repairs 100,000 250,000 Prepare the necessary journal entries to record this transaction, using the expense as incurred approach, for the years 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
Chapter22: Accounting For Changes And Errors.
Section: Chapter Questions
Problem 10E
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In 2020, Pluto Company started selling new computer that carried a 2-year warranty against defects. Based on the manufacturer's recommendations, the entity estimated warranty cost as a percentage of sales.
First year of warranty - 3%
Second year of warranty - 9%
| 2020 | 2021 | |
| Sales | 5,000,000 | 7,000,000 |
| Actual warranty repairs | 100,000 | 250,000 |
Prepare the necessary
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