Blossom Motors sells remote control airplane engines, which carry a one-year warranty. If a customer brings in a defective engine, he replaces the engine with a new one from his inventory. Blossom estimates that 2% of units sold will be defective. As at January 1, the Warranty Liability account had a credit balance of $ 400. Blossom provided the following information for his year end of December 31. Cost per engine $115 Total sales 900 units Actual warranty costs $1,100 1) Calculate the estimated warranty expense for the year. Estimated warranty expense $ 2) prepare the journal entry to record the estimated warranty costs for the year 3)Prepare the journal entry to record the actual warranty costs for the year 4)Calculate the ending balance in the warranty liability account at the end of the year. Endi)ng balance in warranty liability account 5) If Blossom fixed an engine himself instead of replacing it with a new engine, what account would be credited instead of Repair Parts Inventory? if blossom fixed an engine himself instead of replacing it with a new engine, the (blank) account would be creadited instead of repair parts inventory account. {Salaries Exepense, wage payable, warranty expense, warranty liability, warranty repair inventory}
Blossom Motors sells remote control airplane engines, which carry a one-year warranty. If a customer brings in a defective engine, he replaces the engine with a new one from his inventory. Blossom estimates that 2% of units sold will be defective. As at January 1, the Warranty Liability account had a credit balance of $ 400. Blossom provided the following information for his year end of December 31. Cost per engine $115 Total sales 900 units Actual warranty costs $1,100 1) Calculate the estimated warranty expense for the year. Estimated warranty expense $ 2) prepare the journal entry to record the estimated warranty costs for the year 3)Prepare the journal entry to record the actual warranty costs for the year 4)Calculate the ending balance in the warranty liability account at the end of the year. Endi)ng balance in warranty liability account 5) If Blossom fixed an engine himself instead of replacing it with a new engine, what account would be credited instead of Repair Parts Inventory? if blossom fixed an engine himself instead of replacing it with a new engine, the (blank) account would be creadited instead of repair parts inventory account. {Salaries Exepense, wage payable, warranty expense, warranty liability, warranty repair inventory}
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Blossom Motors sells remote control airplane engines,
which carry a one-year warranty. If a customer brings
in a defective engine, he replaces the engine with a
new one from his inventory. Blossom estimates that 2%
of units sold will be defective. As at January 1, the
Warranty Liability account had a credit balance of $
400. Blossom provided the following information for
his year end of December 31. Cost per engine $115
Total sales 900 units Actual warranty costs $1,100 1)
Calculate the estimated warranty expense for the year.
Estimated warranty expense $ 2) prepare the journal
entry to record the estimated warranty costs for the year
3)Prepare the journal entry to record the actual
warranty costs for the year 4)Calculate the ending
balance in the warranty liability account at the end of
the year. Endi)ng balance in warranty liability account 5)
If Blossom fixed an engine himself instead of replacing
it with a new engine, what account would be credited
instead of Repair Parts Inventory? if blossom fixed an
engine himself instead of replacing it with a new
engine, the (blank) account would be creadited instead
of repair parts inventory account. {Salaries Exepense,
wage payable, warranty expense, warranty liability,
warranty repair inventory}
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