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Estimated Warranty Liability Savory Co. sold $764,000 of equipment during January under a one-year warranty. The cost to repair defects under the warranty is estimated at 6% of the sales price. On August 15, a customer required a $298 part replacement, plus $92 of labor under the warranty. Required: (a)  Provide the journal entry for the estimated warranty expense on January 31 for January sales. Jan. 31               (b)  Provide the journal entry for the August 15 warranty work. If an amount box does not require an entry, leave it blank. Aug. 15

Estimated Warranty Liability Savory Co. sold $764,000 of equipment during January under a one-year warranty. The cost to repair defects under the warranty is estimated at 6% of the sales price. On August 15, a customer required a $298 part replacement, plus $92 of labor under the warranty. Required: (a)  Provide the journal entry for the estimated warranty expense on January 31 for January sales. Jan. 31               (b)  Provide the journal entry for the August 15 warranty work. If an amount box does not require an entry, leave it blank. Aug. 15

FINANCIAL ACCOUNTING
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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Estimated Warranty Liability

Savory Co. sold $764,000 of equipment during January under a one-year warranty. The cost to repair defects under the warranty is estimated at 6% of the sales price. On August 15, a customer required a $298 part replacement, plus $92 of labor under the warranty.

Required:

(a)  Provide the journal entry for the estimated warranty expense on January 31 for January sales.

Jan. 31      
       

(b)  Provide the journal entry for the August 15 warranty work. If an amount box does not require an entry, leave it blank.

Aug. 15      
       
       
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