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Alvarado Company sells a machine for $8,000 with a three year warranty that requires the company to replace all defective parts and to provide the
Alvarado Company sells a machine for $8,000 with a three year warranty that requires the company to replace all defective parts and to provide the repair labor at no cost to the customer. During 2020, the company sold 600 machines on account. The company estimates that the repair work will cost $175 for parts and $100 in labor cost (in cash) as an average cost under the warranty period per machine During 2020, 60 machines were returned for repair work. As of the end of the year, the company estimates that another 100 machines will need repair work over the remaining life of the warranty at the same cost. Instruction: 1 Prepared the journal entry to the sale of the machines
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