Cullumber Inc. began selling game consoles on November 1, 2024. The company offers a 60-day warranty for defective merchandise. Based on past experience with other similar products, Cullumber estimates that 2.80% of the units sold will become defective in the warranty period, and that the average cost of replacing or repairing a defective unit is $22. In November, Cullumber sold 33,000 units and 510 defective units were returned. In December, Cullumber sold 38,000 units and 690 defective units were returned. The actual cost of replacing the defective units was $21,120. Prepare a journal entry to accrue for the estimated warranty costs for the November and December sales at December 31, 2024.

Cullumber Inc. began selling game consoles on November 1, 2024. The company offers a 60-day warranty for defective merchandise. Based on past experience with other similar products, Cullumber estimates that 2.80% of the units sold will become defective in the warranty period, and that the average cost of replacing or repairing a defective unit is $22. In November, Cullumber sold 33,000 units and 510 defective units were returned. In December, Cullumber sold 38,000 units and 690 defective units were returned. The actual cost of replacing the defective units was $21,120. Prepare a journal entry to accrue for the estimated warranty costs for the November and December sales at December 31, 2024.

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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