B8 Inc's sales during 2021 totaled $375,000, and the company estimates that warranty costs will be 4.4% of sales. The adjusted balance in Estimated Warranty Payable on December 31, 2020 was $21,000 Cr. BB Inc offers replacement products under its warranty plan. During 2021, warranty replacement costs were $12,900. A. Prepare the journal entry to record the 2021 warranty expense, and also the journal entry to record replacement costs under warranty. Use December 31s the date for both. B. Determine the final balance in the warranty liability account on December 31, 2021. C. Do you recommend that B8 Inc retain the 4.4% estimate? Why or why not. Answer in one brief bullet point or sentence.

B8 Inc's sales during 2021 totaled $375,000, and the company estimates that warranty costs will be 4.4% of sales. The adjusted balance in Estimated Warranty Payable on December 31, 2020 was $21,000 Cr. BB Inc offers replacement products under its warranty plan. During 2021, warranty replacement costs were $12,900. A. Prepare the journal entry to record the 2021 warranty expense, and also the journal entry to record replacement costs under warranty. Use December 31s the date for both. B. Determine the final balance in the warranty liability account on December 31, 2021. C. Do you recommend that B8 Inc retain the 4.4% estimate? Why or why not. Answer in one brief bullet point or sentence.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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