2. Humbolt Hardware Company has a July 31, 2021 year-end. The company sells clocks and provides...
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2. Humbolt Hardware Company has a July 31, 2021 year-end. The company sells clocks and provides a lifetime warranty on their product. Past experience suggests that 4% of clocks sold will be returned for replacement. The estimated replacement cost of a clock is $56.53. During the year, the total sales for the company was $961,900 or 10,040 clocks sold at $95.81 per unit. On September 21, 2021, 26 clocks were returned and replaced under warranty at a total cost of $2,660.30. The returned items were unusable and thus discarded. Provide the general journal entry to record the estimated warranty expense at year-end, and the journal entry to record the returned/replaced items. Show all calculations. (6 marks). 2. Humbolt Hardware Company has a July 31, 2021 year-end. The company sells clocks and provides a lifetime warranty on their product. Past experience suggests that 4% of clocks sold will be returned for replacement. The estimated replacement cost of a clock is $56.53. During the year, the total sales for the company was $961,900 or 10,040 clocks sold at $95.81 per unit. On September 21, 2021, 26 clocks were returned and replaced under warranty at a total cost of $2,660.30. The returned items were unusable and thus discarded. Provide the general journal entry to record the estimated warranty expense at year-end, and the journal entry to record the returned/replaced items. Show all calculations. (6 marks).
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Accounting Principles
ISBN: 978-1119048503
7th Canadian Edition Volume 1
Authors: Jerry J. Weygandt, Donald E. Kieso, Paul D. Kimmel, Barbara Trenholm, Valerie Warren, Lori Novak
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