[The following information applies to the questions displayed below.) Hitzu Company sold a copier (that costs $5,500) for $11,000 cash with a two-year parts warranty to a customer on August 16 of Year 1. Hitzu expects warranty costs to be 4% 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 $145 for materials taken from the parts inventory. These are the only repairs required in Year 2 for this copier. 1. How much warranty expense does the company report for this copier in Year 1? 2. How much is the estimated warranty liability for this copier as of December 31 of Year 1? 3. How much is the estimated warranty liability for this copier as of December 31 of Year 2? 4. Prepare journal entries to record (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. Complete this question by entering your answers in the tabs below. Req 1 to 3 Req 4 1. How much warranty expense does the company report for this copier in Year 1? 2. How much is the estimated warranty liability for this copier as of December 31 of Year 1? 3. How much is the estimated warranty liability for this copier as of December 31 of Year 2? 1. Warranty expense 2. Estimated warranty liability as of December 31 of Year 1 3. Estimated warranty liability as of December 31 of Year 2
[The following information applies to the questions displayed below.) Hitzu Company sold a copier (that costs $5,500) for $11,000 cash with a two-year parts warranty to a customer on August 16 of Year 1. Hitzu expects warranty costs to be 4% 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 $145 for materials taken from the parts inventory. These are the only repairs required in Year 2 for this copier. 1. How much warranty expense does the company report for this copier in Year 1? 2. How much is the estimated warranty liability for this copier as of December 31 of Year 1? 3. How much is the estimated warranty liability for this copier as of December 31 of Year 2? 4. Prepare journal entries to record (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. Complete this question by entering your answers in the tabs below. Req 1 to 3 Req 4 1. How much warranty expense does the company report for this copier in Year 1? 2. How much is the estimated warranty liability for this copier as of December 31 of Year 1? 3. How much is the estimated warranty liability for this copier as of December 31 of Year 2? 1. Warranty expense 2. Estimated warranty liability as of December 31 of Year 1 3. Estimated warranty liability as of December 31 of Year 2
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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![[The following information applies to the questions displayed below.]
Hitzu Company sold a copier (that costs $5,500) for $11,000 cash with a two-year parts warranty to a customer on August
16 of Year 1. Hitzu expects warranty costs to be 4% 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 $145 for materials taken from the parts inventory. These are the only repairs required in Year 2 for this copier.
1. How much warranty expense does the company report for this copier in Year 1?
2. How much is the estimated warranty liability for this copier as of December 31 of Year 1?
3. How much is the estimated warranty liability for this copier as of December 31 of Year 2?
4. Prepare journal entries to record (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.
Complete this question by entering your answers in the tabs below.
Req 1 to 3
Req 4
1. How much warranty expense does the company report for this copier in Year 1?
2. How much is the estimated warranty liability for this copier as of December 31 of Year 1?
3. How much is the estimated warranty liability for this copier as of December 31 of Year 2?
1. Warranty expense
2. Estimated warranty liability as of December 31 of Year 1
3. Estimated warranty liability as of December 31 of Year 2](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F4e45c618-be3e-4b53-8945-b036612548c9%2F66f2e54d-2445-419d-99e8-0ed85dae2c6b%2Frbbc6i_processed.png&w=3840&q=75)
Transcribed Image Text:[The following information applies to the questions displayed below.]
Hitzu Company sold a copier (that costs $5,500) for $11,000 cash with a two-year parts warranty to a customer on August
16 of Year 1. Hitzu expects warranty costs to be 4% 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 $145 for materials taken from the parts inventory. These are the only repairs required in Year 2 for this copier.
1. How much warranty expense does the company report for this copier in Year 1?
2. How much is the estimated warranty liability for this copier as of December 31 of Year 1?
3. How much is the estimated warranty liability for this copier as of December 31 of Year 2?
4. Prepare journal entries to record (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.
Complete this question by entering your answers in the tabs below.
Req 1 to 3
Req 4
1. How much warranty expense does the company report for this copier in Year 1?
2. How much is the estimated warranty liability for this copier as of December 31 of Year 1?
3. How much is the estimated warranty liability for this copier as of December 31 of Year 2?
1. Warranty expense
2. Estimated warranty liability as of December 31 of Year 1
3. Estimated warranty liability as of December 31 of Year 2
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VIEWStep 4: 3. Calculation of the estimated warranty liability for this copier as of December 31 of Year 2:
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