ABC company sells exercise machines for home use. the machines carry a 2- year warranty. past experience indicates that 6% of the units sold will be returned during the warranty period for repairs. the average cost of repairs under warranty is $60 for labour andd $90 for parts per unit. during 2010, 2,500 exercise machines were sold at an average price of $800. during the year, 60 of the machines that were sold were repaired at the average price per unit.

Instructions:

a) prepare the journal entry to record the repairs made under warranty.

b) prepare the journal entry to record the estimated warranty expense for the year.