Chapter 11, Problem 10E

To determine

Warranty Expense:

A warranty expense is the estimated cost which may or may not incur for the repair or replacement of goods sold to customer during the warranty period. A business does not incur such liability after the expiration of warranty period.

:

1. Compute warranty expense of the company at the end of 2015 for the copier.

2. Compute the estimated warranty liability for the copier as on December 31, 2015.

3. How much warranty expense does the company report in 2016 for this copier?

4. How much is the estimated warranty liability for the copier as of December 31, 2016?

5. Prepare journal entries to record (a) sale of copier (b) adjustment on December 31, 2015, to recognize the warranty expense, and (c) the repairs that occur on November 2016