Hitzu Co. sold a copier costing $7,500 with a two-year parts warranty to a customer on August 16, 2017, for $15,000 cash. Hitzu uses the perpetual inventory system. On November 22, 2018, the copier requires on-site repairs that are completed the same day. The repairs cost $106 for materials taken from the Repair Parts Inventory. These are the only repairs required in 2018 for this copier. Based on experience, Hitzu expects to incur warranty costs equal to 3% of dollar sales. It records warranty expense with an adjusting entry at the end of each year.

1.	How much warranty expense does the company report in 2017 for this copier?

Warranty expense

$

2.	How much is the estimated warranty liability for this copier as of December 31, 2017?

Estimated warranty liability

$

3.	How much warranty expense does the company report in 2018 for this copier?

Warranty expense

$

4.	How much is the estimated warranty liability for this copier as of December 31, 2018?

Estimated warranty liability

$

5.	Prepare journal entries to record (a) the copiers sale; (b) the adjustment on December 31, 2017, to recognize the warranty expense; and (c) the repairs that occur in November 2018.

Date	General Journal	Debit	Credit
Aug. 16, 2017
Aug. 16, 2017
Dec 31, 2017
Nov. 22, 2018