ACFI intermediate II

Problem VI-Warranties. Merritt Equipment Company sells computers for $1,000 each and also gives each customer a 2-year warranty that requires the company to perform periodic services and to replace defective parts. During 2019, the company sold 1,200 computers for $1,000 each. Based on past experience, the company has estimated the total 2-year warranty costs as $100 per unit. (Assume sales all occur at December 31, 2019.) In 2020, Merritt incurred actual warranty costs relative to 2019 computer sales of $20,000 (all parts). Instructions (a) Record give the entries to reflect the above transactions (accrual method) for 2019 and 2019. December 31 2019 - Sales DR CR Dec 31 2019 - Warranty Expense DR CR 12/31/2020 - Pmt for actual costs DR CR