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.

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.

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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Computer Wholesalers 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, Computer Wholesalers expects warranty costs to be approximately 5% of sales. Sales for the month of December are $420,000. Actual warranty expenditures in January of the following year were $14,000. Required: 1. Record warranty expense and warranty liability for the month of December based on 5% of sales. 2. Record the payment of the actual warranty expenditures of $14,000 in January of the following year. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Record warranty expense and warranty liability for the month of December based on 5% of sales. Note: If no entry is required for a particular transaction/event, select "No Journal Entry Required" in the first account field. View…
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