Required information [The following information applies to the questions displayed below] Hitzu Company sold a copler (that costs $4,500) for $9,000 cash with a two-year parts warranty to a customer on August 16 of Year 1. Hitzu expects warranty costs to be 6% of dollar sales. It records warranty expense with an adjusting entry on December 31. On January 5 of Year 2, the copier requires on-site repairs that are completed the same day. The repairs cost $108 for materials taken from the parts inventory. These are the only repairs required in Year 2 for this copier. Analyze each of the following transactions: (a) the copier's sale; (b) the adjustment to recognize the warranty expense on December 31 of Year 1; and (c) the repairs that occur on January 5 of Year 2. Show each transaction's effect on the accounting equation-specifically, identify the accounts and amounts (including + or -) for each. (Enter all amounts as positive value.) Date August 16 August 16 December 31 January 5 Assets Liabilities

Required information [The following information applies to the questions displayed below] Hitzu Company sold a copler (that costs $4,500) for $9,000 cash with a two-year parts warranty to a customer on August 16 of Year 1. Hitzu expects warranty costs to be 6% of dollar sales. It records warranty expense with an adjusting entry on December 31. On January 5 of Year 2, the copier requires on-site repairs that are completed the same day. The repairs cost $108 for materials taken from the parts inventory. These are the only repairs required in Year 2 for this copier. Analyze each of the following transactions: (a) the copier's sale; (b) the adjustment to recognize the warranty expense on December 31 of Year 1; and (c) the repairs that occur on January 5 of Year 2. Show each transaction's effect on the accounting equation-specifically, identify the accounts and amounts (including + or -) for each. (Enter all amounts as positive value.) Date August 16 August 16 December 31 January 5 Assets Liabilities

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

A company restores and resells notebook computers. It originally acquires the notebook computers from corporations upgrading their computer systems, and it backs each notebook it sells with a 90-day warranty against defects. Based on previous experience, the company expects warranty costs to be approximately 5% of sales. Sales for the month of December are $530,000. Actual warranty expenditures in January of the following year were $19,500.
During August, Boxer Company sold $362,000 in merchandise that has a one-year warranty. Based on past experience, warranty expenses are estimated to be about 5% of total sales revenue. Boxer used $8,800 in parts for warranty repairs on merchandise that customers returned. Which of the following statements is correct about the estimated warranty expense for the month? O No recording is needed because the warranty expense is estimated. Boxer's estimated warranty Expense increased by $18,100 this month. O Boxer's estimated warranty liabilities had no change this month. O Boxer's estimated warranty expense decreased by $8,800 this month.
On October 29, Lobo Company began operations by purchasing razors for resale. The razors have a 90-day warranty. When a razor is returned, the company discards it and mails a new one from Merchandise Inventory to the customer. The company's cost per new razor is $15 and its retail selling price is $80. The company expects warranty costs to equal 7% of dollar sales. The following transactions occurred. November 11 Sold 70 razors for $5,600 cash. November 30 Recognized warranty expense related to November sales with an adjusting entry. December 9 Replaced 14 razors that were returned under the warranty. December 16 Sold 210 razors for $16,800 cash. December 29 Replaced 28 razors that were returned under the warranty. December 31 Recognized warranty expense related to December sales with an adjusting entry. January 5 Sold 140 razors for $11,200 cash. January 17 Replaced 33 razors that were returned under the warranty. January 31 Recognized warranty expense related to…
! Required information [The following information applies to the questions displayed below.] On October 29, Lobo Company began operations by purchasing razors for resale. The razors have a 90-day warranty. When a razor is returned, the company discards it and malls a new one from Merchandise Inventory to the customer. The company's cost per new razor is $16 and its retail selling price is $80. The company expects warranty costs to equal 8% of dollar sales. The following transactions occurred. November 11 Sold 80 razors for $6,400 cash. November 30 December 9 December 16 December 29 December 31 January 5 January 17 January 31 View transaction list Recognized warranty expense related to November sales with an adjusting entry. Replaced 16 razors that were returned under the warranty. Sold 240 razors for $19,200 cash. Replaced 32 razors that were returned under the warranty. Recognized warranty expense related to December sales with an adjusting entry. Sold 160 razors for $12,800 cash.…
Denger
Record these transactions in general journal ledger: Dec 1: Purchased equipment costing $15,608 by taking out a 4-month installment note with First Bank. Dec 4: Accepted a sales return from Eastern for an item having an original gross sales price of $6,000. The original sale to Eastern occurred in November with terms 2/15, n/30. Dec 5: Specifically wrote off the receivable balance owed by Baker as uncollectible. Dec 7: Returned defective inventory with a gross cost of $4,000 back to Hunt Corp. Dec 14: Wilson returned an item originally purchased on Dec 12 with a gross sales price of $7,000. Dec 14: Returned inventory with a gross cost of $2,000 back to Nelson Industries. Dec 18: Bought office supplies on account for $9,000 from Staples Inc. (open a new Accounts Payable in the subsidiary ledger--Vendor # 210-30). Invoice # is OM1218. Staples Inc.’s terms are n/30 Dec 19: Received the December utilities bill for the amount of $15,000. The bill will be paid in January of next year.…
Catskills guarantees its snowmobiles for three years. Company experience indicates that warranty costs will be approximately 7% of sales. Assume that the Catskills dealer in Colorado Springs made sales totaling $450,000 during 2018. The company received cash for 10% of the sales and notes receivable for the remainder. Warranty payments totaled$12,000 during 2018. Requirements: 1. Record the sales, warranty expense, and warranty payments for the company. Ignore cost of goods sold. 2. Assume the Estimated Warranty Payable is $0 on January 1, 20182018. Post the 2018transactions to the Estimated Warranty Payable T-account. At the end of 2018,how much in Estimated Warranty Payable does the company owe?
On August 1, Year 1, Pereira Corporation has sold 1,700 Wiglows to Mendez Company at $480 each. Mendez also purchased a 1-year service-type warranty on all the Wiglows for $12 per unit. In Year 1, On December 31, Pereira recorded warranty costs incurred in Year 1 of $9,000. Warranty costs for Year 2 of $8,400 were recorded on July 31. Required: 1. Prepare the journal entries for the preceding transactions. 2. Show how Pereira would report the items on the December 31, Year 1, balance sheet.
Vala
Warranty Liability: (same info as previously described) A home improvement store sells lawnmowers and includes a warranty they will be free of defects for 1 year. The store estimates $2 per lawnmower sold will result in warranty covered defects. The company sells 1000 lawnmowers during the accounting period. The company also replaces $600 worth of lawnmowers due to ACTUAL warranty issues with customers during the accounting period. What is the Warranty Reserve balance (liability) based on All the information above for the accounting period. You can assume the beginning balance of the liability account was $0. O $600 O Not enough info O $2,000 O $1,400