Question
i need help with an accounting question......Financial accounting 2, chapter 10 - problem 10-3A On Nov 10, 2017 Singh Electronics began to buy and resell
i need help with an accounting question......Financial accounting 2, chapter 10 - problem 10-3A
On Nov 10, 2017 Singh Electronics began to buy and resell scanners for $55 each. Singh uses the perpetual system to account for inventories. The scanners are covered under a warranty that requires the company to replace any non-working scanner within 90 days. When a scanner is returned, the company simply throws it away and mails a new one from inventory to the customer. The companys cost for a new scanner is only $35. Sing estimates warranty costs based on 18% of the number of units sold. The following transactions occurred in 2017 and 2018 (ignore GST AND PST):
Nov 15 - sold 2000 scanners for 110000 cash
30 - recognized warranty expense for Nov with an adjusting entry
Dec 8 - Replaced 150 scanners that were returned under the warranty
15 - sold 5500 scanners
29 - replaced 40 scanners that were returned under the warranty
31 - recognized warranty expense for Dec with an adjusting entry
2018
Jan 14 - sold 275 scanners
20- replaced 63 scanners that were returned under the warranty
31 - recognized warranty expense for Jan with an adjusting entry.
required:
- how much warranty expense should be reported for Nov and Dec 2017?
- How much warranty expense should be reported for Jan 2018?
- what is the balance ofthe estimated warranty liability as ofDec 31, 2017?
- what is the balance of the estimated warranty liability as of Jan 31, 2018?
- Prepare journal entries to record the transactions and adjustments (ignore sales tax)
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