Milford Company sells a motor that carries a three - month unconditional warranty against proc failure. Based on a reliable statistical analysis, Milford knows that between the sale and the end the product warranty period, four percent of the units sold will require repair at an average cost $60 per unit. The following data reflect Milford's recent experience: October November Decem Dec. 31 Total Units sold 23,000 22,000 25,000 70,000 Known product failures from sales in: October 120 180 160 460 November 130 220 350 December 210 210 Calculate and prepare a
Milford Company sells a motor that carries a three - month unconditional warranty against proc failure. Based on a reliable statistical analysis, Milford knows that between the sale and the end the product warranty period, four percent of the units sold will require repair at an average cost $60 per unit. The following data reflect Milford's recent experience: October November Decem Dec. 31 Total Units sold 23,000 22,000 25,000 70,000 Known product failures from sales in: October 120 180 160 460 November 130 220 350 December 210 210 Calculate and prepare a
Chapter1: Financial Statements And Business Decisions
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Transcribed Image Text:Milford Company sells a motor that carries a three-month unconditional warranty against product
failure. Based on a reliable statistical analysis, Milford knows that between the sale and the end of
the product warranty period, four percent of the units sold will require repair at an average cost of
$60 per unit. The following data reflect Milford's recent experience: October November December
Dec. 31 Total Units sold 23,000 22,000 25,000 70,000 Known product failures from sales in:
October 120 180 160 460 November 130 220 350 December 210 210 Calculate, and prepare a
journal entry to record, the estimated liability for product warranties at December 31. Assume that
warranty costs of known failures have already been reflected in the records.
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