Hardin Widget Manufacturing began operations in January 2019. Hardin sells widgets that carry a two- year manufacturer's warranty against defects in workmanship. Hardin's management projects that 2% of the widgets will require repair during the first year of the warranty while approximately 8% will require repair during the second year of the warranty. The widgets sell for $400 each. The average cost to repair a widget is $50. The company sells 60% of the widgets to retail customers who must pay a 9% sales tax. Sales and warranty information for 2019 and 2020 are as follows: 2019: Sold 200 widgets on account; actual warranty expenditures were $300. 2020: Sold 300 widgets on account; actual warranty expenditures were $500. Required: 1. Prepare journal entries that summarize the sales and any aspects of the warranty for 2019. 2. Prepare journal entries that summarize the sales and any aspects of the warranty for 2020.

Hardin Widget Manufacturing began operations in January 2019. Hardin sells widgets that carry a two- year manufacturer's warranty against defects in workmanship. Hardin's management projects that 2% of the widgets will require repair during the first year of the warranty while approximately 8% will require repair during the second year of the warranty. The widgets sell for $400 each. The average cost to repair a widget is $50. The company sells 60% of the widgets to retail customers who must pay a 9% sales tax. Sales and warranty information for 2019 and 2020 are as follows: 2019: Sold 200 widgets on account; actual warranty expenditures were $300. 2020: Sold 300 widgets on account; actual warranty expenditures were $500. Required: 1. Prepare journal entries that summarize the sales and any aspects of the warranty for 2019. 2. Prepare journal entries that summarize the sales and any aspects of the warranty for 2020.

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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Concept explainers

Contract Costing

Contract costing is about tracing particular costs related to a particular contract entered into with the customer. It is one of the forms of job order costing. It is useful in long-term contracts at the most. It is seen that substantial time is required for the completion of the contract which takes different accounting periods. Thus, it is very much helpful for recognizing the costs associated with it and accounting in their specific accounting periods.

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Hardin Widget Manufacturing began operations in January 2019. Hardin sells widgets that carry a two-
year manufacturer's warranty against defects in workmanship. Hardin's management projects that 2% of
the widgets will require repair during the first year of the warranty while approximately 8% will require
repair during the second year of the warranty. The widgets sell for $400 each. The average cost to repair
a widget is $50. The company sells 60% of the widgets to retail customers who must pay a 9% sales tax.
Sales and warranty information for 2019 and 2020 are as follows:
2019: Sold 200 widgets on account; actual warranty expenditures were $300.
2020: Sold 300 widgets on account; actual warranty expenditures were $500.
Required:
1. Prepare journal entries that summarize the sales and any aspects of the warranty for 2019.
2. Prepare journal entries that summarize the sales and any aspects of the warranty for 2020.

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