Question
Clean-All Inc. sells, on account, washing machines with a 3-year assurance-type warranty. In the past, Clean-All has found that in the year after sale, warranty
Clean-All Inc. sells, on account, washing machines with a 3-year assurance-type warranty. In the past, Clean-All has found that in the year after sale, warranty costs have been 3% of sales; in the second year after sale, 5% of sales; and in the third year after sale, 7% of sales. The following data are also available:
| Year | Sales | Warranty |
|---|---|---|
| Expenditures | ||
| 2016 | $500,000 | $62,000 |
| 2017 | 650,000 | 82,000 |
| 2018 | 700,000 | 85,000 |
| Required: | |
| 1. | Prepare the journal entries for the preceding transactions for 20162018. Closing entries are not required. |
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Frank Woods Business Accounting
Authors: Frank Wood, Alan Sangster
9th Edition
0273655523, 9780273655527
