Logan Manufacturing Co. warrants its products for one year. The estimated product warranty is 4% of sales. Assume that sales were $660,000 for January. In February, a customer received warranty repairs requiring $250 of parts and $95 of labor.Required:a.Journalize the adjusting entry required at January 31, the end of the first month of the current fiscal year, to record the accrued product warranty.*CHART OF ACCOUNTSLogan Manufacturing Co.General Ledger ASSETS110Cash111Accounts Receivable112Interest Receivable113Notes Receivable115Merchandise Inventory116Supplies118Prepaid Insurance120Land123Building124Accumulated Depreciation-Building125Office Equipment126Accumulated Depreciation-Office Equipment LIABILITIES210Accounts Payable213Interest Payable214Notes Payable215Wages Payable216Social Security Tax Payable217Medicare Tax Payable218Employees Federal Income Tax Payable219Employees State Income Tax Payable221Retirement Savings Deductions Payable224Federal Unemployment Tax Payable225State Unemployment Tax Payable226Vacation Pay Payable227Unfunded Pension Liability228Product Warranty Payable EQUITY310Owner, Capital311Owner, Drawing REVENUE410Sales610Interest Revenue EXPENSES510Cost of Merchandise Sold520Wages Expense524Depreciation Expense-Building525Delivery Expense526Repairs Expense529Selling Expenses531Rent Expense532Depreciation Expense-Office Equipment533Insurance Expense534Supplies Expense535Payroll Tax Expense536Vacation Pay Expense537Pension Expense538Cash Short and Over539Product Warranty Expense540Miscellaneous Expense710Interest Expense JOURNALACCOUNTING EQUATIONDATEDESCRIPTIONPOST. REF.DEBITCREDITASSETSLIABILITIESEQUITY1Adjusting Entries23 JOURNALACCOUNTING EQUATIONDATEDESCRIPTIONPOST. REF.DEBITCREDITASSETSLIABILITIESEQUITY123

The question is based on the concept of Financial Accounting.Answer Accounts Debit Credit A Product warranty Expense (660000*4%) $26,400 To product warranty Payable $ 26,400 ( To Record product warranty provided on 660,000 @ 4% B Product warranty payable $ 345 To Inventory $ 250 To Wages $ 95 (To record warranty cost incurred )

Answered: Logan Manufacturing Co. warrants its…

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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Question

Logan Manufacturing Co. warrants its products for one year. The estimated product warranty is 4% of sales. Assume that sales were $660,000 for January. In February, a customer received warranty repairs requiring $250 of parts and $95 of labor.

Required:

a.	Journalize the adjusting entry required at January 31, the end of the first month of the current fiscal year, to record the accrued product warranty.*

CHART OF ACCOUNTS

Logan Manufacturing Co.

General Ledger

	ASSETS
110	Cash
111	Accounts Receivable
112	Interest Receivable
113	Notes Receivable
115	Merchandise Inventory
116	Supplies
118	Prepaid Insurance
120	Land
123	Building
124	Accumulated Depreciation-Building
125	Office Equipment
126	Accumulated Depreciation-Office Equipment

	LIABILITIES
210	Accounts Payable
213	Interest Payable
214	Notes Payable
215	Wages Payable
216	Social Security Tax Payable
217	Medicare Tax Payable
218	Employees Federal Income Tax Payable
219	Employees State Income Tax Payable
221	Retirement Savings Deductions Payable
224	Federal Unemployment Tax Payable
225	State Unemployment Tax Payable
226	Vacation Pay Payable
227	Unfunded Pension Liability
228	Product Warranty Payable

	EQUITY
310	Owner, Capital
311	Owner, Drawing

	REVENUE
410	Sales
610	Interest Revenue

	EXPENSES
510	Cost of Merchandise Sold
520	Wages Expense
524	Depreciation Expense-Building
525	Delivery Expense
526	Repairs Expense
529	Selling Expenses
531	Rent Expense
532	Depreciation Expense-Office Equipment
533	Insurance Expense
534	Supplies Expense
535	Payroll Tax Expense
536	Vacation Pay Expense
537	Pension Expense
538	Cash Short and Over
539	Product Warranty Expense
540	Miscellaneous Expense
710	Interest Expense

JOURNAL
ACCOUNTING EQUATION
DATE
DESCRIPTION
POST. REF.
DEBIT
CREDIT
ASSETS
LIABILITIES
EQUITY
1
Adjusting Entries
2
3

JOURNAL
ACCOUNTING EQUATION
DATE
DESCRIPTION
POST. REF.
DEBIT
CREDIT
ASSETS
LIABILITIES
EQUITY
1
2
3

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