Question:Carrot Company began selling a new generation of cell phones on November 1, 2021. The company offers a 90-day warranty for defective phones. Based on Carrot's experience with previous generations of this phone, theyestimate that 2.0% of the units sold will become defective in the warranty period, and that the average cost ofreplacing or repairing a defective unit is $100. In November, Carrot sold 25,000 units and 500 defective unitswere returned. In December, Carrot sold 35,000 units and 600 units were returned. The actual cost of replacingthe defective units was $110,000.Instructions:a. Prepare a journal entry to accrue for the estimated warranty costs for the November and December salesat December 31, 2021.b. Prepare one summary journal entry at December 31, 2021 to record the cost of replacing the defective cellphones returned during November and December.c. What amounts will be included in Carrot's 2021 income statement and balance sheet at December 31,2021, with regard to the warranty?Round amounts to the nearest dollar. Show ALL calculations for full marks.

Warranty Liability The estimation of warranty liability which was calculated in accordance with…

the defective units was $110,000. Instructions: a. Prepare a journal entry to accrue for the estimated warranty costs for the November and December sales at December 31, 2021. b. Prepare one summary journal entry at December 31, 2021 to record the cost of replacing the defective cell phones returned during November and December. c. What amounts will be included in Carrot's 2021 income statement and balance sheet at December 31, 2021, with regard to the warranty? Round amounts to the nearest dollar, Show ALL calculations for full marks.

the defective units was $110,000. Instructions: a. Prepare a journal entry to accrue for the estimated warranty costs for the November and December sales at December 31, 2021. b. Prepare one summary journal entry at December 31, 2021 to record the cost of replacing the defective cell phones returned during November and December. c. What amounts will be included in Carrot's 2021 income statement and balance sheet at December 31, 2021, with regard to the warranty? Round amounts to the nearest dollar, Show ALL calculations for full marks.

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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