Piefer Company sells refrigerators with an embedded 3-year warranty. During 2022, Piefer sold 15,000 refrigerators of which, 6 percent are estimated to need some sort of repair under the warranty period. The best estimate is that each repair will average $40. No warranty repairs were made in 2022 for these sales. At the end of 2023, repairs under warranty totaled $14,000 and an analysis revealed that Piefer may need to spend $25,000 for repairs in the coming year under the warranty.                    Record the journal entry necessary to report the correct balance in warranty payable at the end of 2023.

Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter22: Accounting For Changes And Errors.
Section: Chapter Questions
Problem 10E
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Piefer Company sells refrigerators with an embedded 3-year warranty. During 2022, Piefer sold 15,000 refrigerators of which, 6 percent are estimated to need some sort of repair under the warranty period. The best estimate is that each repair will average $40. No warranty repairs were made in 2022 for these sales. At the end of 2023, repairs under warranty totaled $14,000 and an analysis revealed that Piefer may need to spend $25,000 for repairs in the coming year under the warranty.                    Record the journal entry necessary to report the correct balance in warranty payable at the end of 2023.

 

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