E10-8B

E10-. Warranty Costs Young Company sells an electric timer that carries a 3-month unconditional war- Prepare a journal entry to record one game of earned revenue on September 12. b. ranty against product failure. Based on reliable statistical analysis, Young knows that between the sale and the end of the product warranty period, four percent of the units sold will require repair at an average cost of $50 per unit. The following data reflect Young's recent experience: October November December Dec. 31 Total 36,000 34,000 45,000 115,000 Units sold Known product failures from sales in: October November December 320 1,080 550 230 210 360 410 590 410 Calculate, and prepare a journal entry to record the estimated liability for product warranties at De- cember 31. Assume that warranty costs of known failures have already been reflected in the records- for the Mammoth Corporation at