In 2017, Mare Company began selling a new calculator that carried a two year warranty against...

 

 

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In 2017, Mare Company began selling a new calculator that carried a two year warranty against defects. Mare projected the estimated warranty cost (as a percent of sales) as follows: First year of warranty 4% Second year of warranty 10% Sales and actual warranty repairs were: Sales Actual warranty repairs 2017 2018 5,000,000 9,000,000 200,000 560,000 Required: 1) Prepare the entries in connection with the warranty using the "expense as incurred" approach for 2017 and 2018. To record 2017 warranty expense Warranty Expense Cash 2) Prepare the entries in connection with the warranty using the "accrual" approach for 2017 and 2018. To record 2017 warranty expense Warranty Expense Estimated warranty liability To record 2017 actual warranty expense Estimated warranty liability Cash To record 2018 warranty expense Warranty expense Estimated warranty liability To record the 2018 actual warranty expense Estimated warranty liability Cash 3) Determine the estimated warranty liability on December 31, 2018. Estimated Liability for 2018 Warranty Expense 2017 2018 Actual warranty expense 2017 2018 Estimated warranty liability In 2017, Mare Company began selling a new calculator that carried a two year warranty against defects. Mare projected the estimated warranty cost (as a percent of sales) as follows: First year of warranty 4% Second year of warranty 10% Sales and actual warranty repairs were: Sales Actual warranty repairs 2017 2018 5,000,000 9,000,000 200,000 560,000 Required: 1) Prepare the entries in connection with the warranty using the "expense as incurred" approach for 2017 and 2018. To record 2017 warranty expense Warranty Expense Cash 2) Prepare the entries in connection with the warranty using the "accrual" approach for 2017 and 2018. To record 2017 warranty expense Warranty Expense Estimated warranty liability To record 2017 actual warranty expense Estimated warranty liability Cash To record 2018 warranty expense Warranty expense Estimated warranty liability To record the 2018 actual warranty expense Estimated warranty liability Cash 3) Determine the estimated warranty liability on December 31, 2018. Estimated Liability for 2018 Warranty Expense 2017 2018 Actual warranty expense 2017 2018 Estimated warranty liability