Asked by Brittany Hoffman on Jun 20, 2024
Verified
A company sells sofas with a 6-month warranty.In January,the company sold 100,000 sofas at $1,750 each; and 500 sofas needed repairs during that same month.The total repairs amounted to $85,000 costs from the upholstery materials inventory.It is estimated that 2% of all units sold will need repairs under warranty at an estimated cost of $200 per unit.Prepare the journal entries to record (a)estimated warranty expense for January and (b)warranty repair costs for January.
Warranty Expense
An estimated cost that a company expects to incur for the repair or replacement of a product during its warranty period.
Upholstery Materials
These are fabrics, paddings, and springs used to cover and cushion furniture.
Repairs
Expenses incurred in the process of fixing or restoring equipment, property, or machinery to keep them in operational condition.
- Acquire the ability to calculate and document the costs incurred by employers for employee benefits, including bonus payments and warranty-related expenses.
- Comprehend the accounting processes for sales incorporating warranties and the associated projected warranty costs.
- Elevate your skillset to construct general journal entries for payroll processes, comprising accruals and payments.
Verified Answer
MP
Learning Objectives
- Acquire the ability to calculate and document the costs incurred by employers for employee benefits, including bonus payments and warranty-related expenses.
- Comprehend the accounting processes for sales incorporating warranties and the associated projected warranty costs.
- Elevate your skillset to construct general journal entries for payroll processes, comprising accruals and payments.
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