Question
A Appliances Inc. offers a 12-month warranty on all its appliances. A Appliances estimates that one appliance out of each 1000 sold will require warranty
A Appliances Inc. offers a 12-month warranty on all its appliances. A Appliances estimates that one appliance out of each 1000 sold will require warranty service and that the average cost per warranty claim is $300. A appliances sold 30,000 appliances during 2020.The estimated warranty liability at the beginning of the year was $ 4,500. Claims of $7,000 were actually paid during the year to honour warranties. A has a December 31 year-end.
Required:
- Calculate the estimated warranty expense for A Appliances for 2020.
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- Calculate the balance of the Estimated Warranty Liability account at December 31, 2020.
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Part B. . For the month of November 2020, A Appliances recorded
$ 280,000 in sales, which were all on account. The company is required to charge 6% PST and 5% GST on all sales.
Required:
Prepare the journal entry to record the companys sales activity for November 2020.
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Part C .On September 30, 2020, A Appliances (above) borrowed $250,000 from the Peoples National Bank on a nine-month, 7% note.
Required:
Give the journal entry on June 30, 2021 when the note is paid by A Appliances.
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