Current Attempt in Progress

Lily Company sells automatic can openers under a $75-$day warranty for defective

merchandise. Based on past experience, Lily estimates that $4\%$ of the units sold will become

defective during the warranty period. Management estimates that the average cost of

replacing or repairing a defective unit is $$20.$ The units sold and units defective that

occurred during the last $2$ months of $2022$ are as follows.

$($a$)$

Prepare the journal entry to record the costs incurred in honoring $1,273$ warranty

claims. $($Assume actual costs of $$25,460.)($Credit account titles are automatically indented

when amount is entered. Do not indent manually.$)$

Account Titles and Explanation

Debit

eTextbook and Media

List of Accounts

$($b$)$

Prepare the journal entry to record the warranty liability at December $31$ for the units

sold in November and December. $($Credit account titles are automatically indented when

amount is entered. Do not indent manually.$)$

Account Titles and Explanation

Debit

eTextbook and Media

List of Accounts

Save for Later

Attempts: $0$ of $5$ used

$($c$)$

Give the entry to record the honoring of $500$ warranty contracts in January at an

average cost of $$20.($Credit account titles are automatically indented when amount is

entered. Do not indent manually.$)$

Account Titles and Explanation

Debit