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Accrued product warranty Parker Manufacturing Co. warrants its products for one year. The estimated product warranty is 2.5% of sales. Assume that sales were $600,000 for January. In February, a customer received warranty repairs requiring $200 of parts and $110 of labor. a. Journalize the adjusting entry required at January 31, the end of the first month of the current fiscal year, to record the accrued product warranty. b. Journalize the entry to record the warranty work provided in February.

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Financial Accounting

15th Edition
Carl Warren + 2 others
Publisher: Cengage Learning
ISBN: 9781337272124

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BuyFindarrow_forward

Financial Accounting

15th Edition
Carl Warren + 2 others
Publisher: Cengage Learning
ISBN: 9781337272124
Chapter 11, Problem 20E
Textbook Problem
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Accrued product warranty

Parker Manufacturing Co. warrants its products for one year. The estimated product warranty is 2.5% of sales. Assume that sales were $600,000 for January. In February, a customer received warranty repairs requiring $200 of parts and $110 of labor.

  1. a. Journalize the adjusting entry required at January 31, the end of the first month of the current fiscal year, to record the accrued product warranty.
  2. b. Journalize the entry to record the warranty work provided in February.

a.

To determine

Journalize adjusting entry to record estimated warranty expense at January 31.

Explanation of Solution

Warranty: It is an agreement made by the company to provide guarantee against the defects in the products.

Prepare journal entry to record estimated warranty expense.

DateAccounts and ExplanationPost RefDebit ($)Credit ($)
January 31Product Warranty Expense  (1) 15,000 
Product Warranty Payable 15,000
    (To record the accrual of warranty payable)   

Table (1)

  • Product warranty expense is an expense and it decreases the equity value...

b.

To determine

Journalize warranty work provided in February.

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Chapter 11 Solutions

Financial Accounting
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