On November 10, 2020, Singh Electronics began to buy and resell scanners for $60 each. Singh uses the perpetual system to account for inventories. The scanners are covered under a warranty that requires the company to replace any non-working scanner within 90 days. When a scanner is returned, the company simply throws it away and mails a new one from inventory to the customer. The company’s cost for a new scanner is only $40. Singh estimates warranty costs based on 15% of the number of units sold. The following transactions occurred in 2020 and 2021 (ignore GST and PST): 2020 Nov. 15 Sold 2,500 scanners for $150,000 cash. 30 Recognized warranty expense for November with an adjusting entry. Dec. 8 Replaced 200 scanners that were returned under the warranty. 15 Sold 6,000 scanners. 29 Replaced 50 scanners that were returned under the warranty. 31 Recognized warranty expense for December with an adjusting entry. 2021 Jan. 14 Sold 300 scanners. 20 Replaced 72 scanners that were returned under the warranty. 31 Recognized warranty expense for January with an adjusting entry. Required: 1. How much warranty expense should be reported for November and December 2020? 2. How much warranty expense should be reported for January 2021? (Round your intermediate calculations and final answer to the nearest whole number.) 3. What is the balance of the estimated warranty liability as of December 31, 2020? 4. What is the balance of the estimated warranty liability as of January 31, 2021? 5. Prepare journal entries to record ALL transactions and year-end adjustments (ignore sales taxes). (Round intermediate calculations and final answer to the nearest whole number.) 1 Record the sale of scanners to customers. 2 Record the cost of the November 15 sale. 3 Record the scanner warranty expense and liability at 15% of the units sold. 4 Record the cost of scanner warranty replacements. 5 Record the sale of scanners to customers. 6 Record the cost of the December 15 sale. 7 Record the cost of scanners warranty replacements. 8 Record the scanner warranty expense and liability at 15% of the units sold. 9 Record the sale of scanners to customers. 10 Record the cost of the January 14 sale. 11 Record the cost of scanner warranty replacements. 12 Record the scanner warranty expense and liability at 15% of the units sold.

On November 10, 2020, Singh Electronics began to buy and resell scanners for $60 each. Singh uses the perpetual system to account for inventories. The scanners are covered under a warranty that requires the company to replace any non-working scanner within 90 days. When a scanner is returned, the company simply throws it away and mails a new one from inventory to the customer. The company’s cost for a new scanner is only $40. Singh estimates warranty costs based on 15% of the number of units sold. The following transactions occurred in 2020 and 2021 (ignore GST and PST): 2020 Nov. 15 Sold 2,500 scanners for $150,000 cash. 30 Recognized warranty expense for November with an adjusting entry. Dec. 8 Replaced 200 scanners that were returned under the warranty. 15 Sold 6,000 scanners. 29 Replaced 50 scanners that were returned under the warranty. 31 Recognized warranty expense for December with an adjusting entry. 2021 Jan. 14 Sold 300 scanners. 20 Replaced 72 scanners that were returned under the warranty. 31 Recognized warranty expense for January with an adjusting entry. Required: 1. How much warranty expense should be reported for November and December 2020? 2. How much warranty expense should be reported for January 2021? (Round your intermediate calculations and final answer to the nearest whole number.) 3. What is the balance of the estimated warranty liability as of December 31, 2020? 4. What is the balance of the estimated warranty liability as of January 31, 2021? 5. Prepare journal entries to record ALL transactions and year-end adjustments (ignore sales taxes). (Round intermediate calculations and final answer to the nearest whole number.) 1 Record the sale of scanners to customers. 2 Record the cost of the November 15 sale. 3 Record the scanner warranty expense and liability at 15% of the units sold. 4 Record the cost of scanner warranty replacements. 5 Record the sale of scanners to customers. 6 Record the cost of the December 15 sale. 7 Record the cost of scanners warranty replacements. 8 Record the scanner warranty expense and liability at 15% of the units sold. 9 Record the sale of scanners to customers. 10 Record the cost of the January 14 sale. 11 Record the cost of scanner warranty replacements. 12 Record the scanner warranty expense and liability at 15% of the units sold.

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

	2020
Nov.	15	Sold 2,500 scanners for $150,000 cash.
	30	Recognized warranty expense for November with an adjusting entry.
Dec.	8	Replaced 200 scanners that were returned under the warranty.
	15	Sold 6,000 scanners.
	29	Replaced 50 scanners that were returned under the warranty.
	31	Recognized warranty expense for December with an adjusting entry.
	2021
Jan.	14	Sold 300 scanners.
	20	Replaced 72 scanners that were returned under the warranty.
	31	Recognized warranty expense for January with an adjusting entry.

Required:
1. How much warranty expense should be reported for November and December 2020?

2. How much warranty expense should be reported for January 2021? (Round your intermediate calculations and final answer to the nearest whole number.)

3. What is the balance of the estimated warranty liability as of December 31, 2020?

4. What is the balance of the estimated warranty liability as of January 31, 2021?

5. Prepare journal entries to record ALL transactions and year-end adjustments (ignore sales taxes). (Round intermediate calculations and final answer to the nearest whole number.)

1

Record the sale of scanners to customers.
2

Record the cost of the November 15 sale.
3

Record the scanner warranty expense and liability at 15% of the units sold.
4

Record the cost of scanner warranty replacements.
5

Record the sale of scanners to customers.
6

Record the cost of the December 15 sale.
7
Record the cost of scanners warranty replacements.
- 8
  
  Record the scanner warranty expense and liability at 15% of the units sold.
- 9
  
  Record the sale of scanners to customers.
- 10
  
  Record the cost of the January 14 sale.
- 11
  
  Record the cost of scanner warranty replacements.
- 12
  
  Record the scanner warranty expense and liability at 15% of the units sold.

Warranty Expense
November
December
Total
2. How much warranty expense should be reported for January 2021? (Round y
nearest whole number.)
Warranty expense
3. What is the balance of the estimated warranty liability as of December 31, 20:
Warranty expense for November
Warranty expense for December
Cost of replacing items in December
Liability balance

4. What is the balance of the estimated warranty liability as of January 31, 2021?
Beginning balance
Warranty expense for January
Cost of replacing items in January
Liability balance
5. Prepare journal entries to record ALL transactions and year-end adjustments
and final answer to the nearest whole number.)

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