Computer Gian Manufacturing began operations in January 2008. Computer Giant manufactures and sells two different computer monitors. Monitor A, is a flat panel hi-definition monitor, which carries a two-year manufacturer's warranty against defects in workmanship. Computer Giant's management project that 8% of the monitors will require repair during the first year of the warranty while approximately 6% will require repair during the second year of the warranty. Monitor A sells for $400. The average cost to repair a monitor is $80. Monitor B is a regular LED monitor that retails for $150. Computer Giant has entered into an agreement with a local electronics firm who charges Computer Giant $20 per monitor sold and then covers all warranty costs related to this monitor. Sales and warranty information for 2008 is as follows: Sold 2,000 monitors (800 monitor A and 1,200 monitor B); all sales were on account. Actual warranty expenditures for monitor A were $4,000. Instructions: (a) Prepare journal entries that summarize the sales and any aspects of the warranty for 2008. (b) Determine the balance in the estimated warranty liability at the end of 2008. GENERAL JOURNAL DATE PARTICULARS PR DEBIT CREDIT b)
Computer Gian Manufacturing began operations in January 2008. Computer Giant manufactures and sells two different computer monitors.
Monitor A, is a flat panel hi-definition monitor, which carries a two-year manufacturer's warranty against defects in workmanship. Computer Giant's management project that 8% of the monitors will require repair during the first year of the warranty while approximately 6% will require repair during the second year of the warranty. Monitor A sells for $400. The average cost to repair a monitor is $80.
Monitor B is a regular LED monitor that retails for $150. Computer Giant has entered into an agreement with a local electronics firm who charges Computer Giant $20 per monitor sold and then covers all warranty costs related to this monitor.
Sales and warranty information for 2008 is as follows:
Sold 2,000 monitors (800 monitor A and 1,200 monitor B); all sales were on account.
Actual warranty expenditures for monitor A were $4,000.
Instructions:
(a) Prepare
(b) Determine the balance in the estimated warranty liability at the end of 2008.
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GENERAL JOURNAL |
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DATE |
PARTICULARS |
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DEBIT |
CREDIT |
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b)
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