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Fosters Manufacturing Co. warrants its products for one year. The estimated product warranty is 8% of sales. Assume that sales were $560,000 for January. On

Fosters Manufacturing Co. warrants its products for one year. The estimated product warranty is 8% of sales. Assume that sales were $560,000 for January. On February 7, a customer received warranty repairs requiring $260 of parts and $70 of labor.

CHART OF ACCOUNTS
Fosters Manufacturing Co.
General Ledger
ASSETS
110Cash
111Accounts Receivable
112Interest Receivable
113Notes Receivable
115Inventory
116Supplies
118Prepaid Insurance
120Land
123Building
124Accumulated Depreciation-Building
125Office Equipment
126Accumulated Depreciation-Office Equipment
LIABILITIES
210Accounts Payable
213Interest Payable
214Notes Payable
215Wages Payable
216Social Security Tax Payable
217Medicare Tax Payable
218Employees Federal Income Tax Payable
219Employees State Income Tax Payable
221Retirement Savings Deductions Payable
224Federal Unemployment Tax Payable
225State Unemployment Tax Payable
226Vacation Pay Payable
227Unfunded Pension Liability
228Product Warranty Payable
EQUITY
310Common Stock
311Retained Earnings
312Dividends
REVENUE
410Sales
610Interest Revenue
EXPENSES
510Cost of Goods Sold
520Wages Expense
524Depreciation Expense-Building
525Delivery Expense
526Repairs Expense
529Selling Expenses
531Rent Expense
532Depreciation Expense-Office Equipment
533Insurance Expense
534Supplies Expense
535Payroll Tax Expense
536Vacation Pay Expense
537Pension Expense
538Cash Short and Over
539Product Warranty Expense
540Miscellaneous Expense
710Interest Expense

a. Journalize the adjusting entry required at January 31, the end of the first month of the current fiscal year, to record the accrued product warranty. Refer to the Chart of Accounts for exact wording of account titles.

PAGE 1

JOURNAL

ACCOUNTING EQUATION

DATEDESCRIPTIONPOST. REF.DEBITCREDITASSETSLIABILITIESEQUITY

1

Adjusting Entries

2

3

b. On February 7, journalize the entry to record the warranty work provided in February. Refer to the Chart of Accounts for exact wording of account titles.

PAGE 2

JOURNAL

ACCOUNTING EQUATION

DATEDESCRIPTIONPOST. REF.DEBITCREDITASSETSLIABILITIESEQUITY

1

2

3

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