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Instructions X Clean Corporation manufactures and sells dishwashers. Clean provides all customers with a two year warranty guaranteeing to repair, free of charge, any defects
Instructions X Clean Corporation manufactures and sells dishwashers. Clean provides all customers with a two year warranty guaranteeing to repair, free of charge, any defects reported during this time period. During the year, it sold 100,000 dishwashers for $325 each. Analysis of past warranty records indicates that 12% of all sales will be returned for repair within the warranty period. Clean expects to incur expenditures of $14 to repair each dishwasher. The account Estimated Liability for Warranties had a balance of $120,000 on January 1. Clean incurred $150,000 in actual expenditures during the year. General Journal X Required: Prepare all journal entries necessary to record the events related to the warranty transactions during the year. Determine the adjusted ending balance in the Estimated Liability for Warranties account. Chart of Accounts 1. Prepare all journal entries with the impact on the financial statements necessary to record the events related to the warranty transactions during the year on December 31. Assume credit sales and inventory expenditures for actual warranty costs incurred. CHART OF ACCOUNTS General Journal Instructions Clean Corporation General Ledger PAGE 1 IMPACT ON FINANCIAL STATEMENTS BALANCE SHEET INCOME STATEMENT GENERAL JOURNAL REVENUE 411 Sales DATE ACCOUNT TITLE POST. REF. DEBIT CREDIT ASSETS LIABILITIESQUITY REVENUEEXPENSESNCOME NET 1 ASSETS 111 Cash 121 Accounts Receivable 141 Inventory 152 Prepaid Insurance 154 Supplies 174 Equipment 179 Accumulated Depreciation 2 w 4 5 6 EXPENSES 500 Cost of Goods Sold 521 Salaries and Wages Expense 525 Warranty Expense 532 Utilities Expense 533 Insurance Expense 534 Rent Expense 537 Supplies Expense 541 Depreciation Expense 551 Advertising Expense 559 Miscellaneous Expenses 810 Interest Expense 910 Income Tax Expense Final Question LIABILITIES 211 Accounts Payable 231 Salaries and Wages Payable 235 Notes Payable 253 Estimated Liability for Warranties 261 Income Taxes Payable X 2. Determine the adjusted ending balance in the Estimated Liability for Warranties account. Ending Balance = $ EQUITY 311 Capital Stock 331 Retained Earnings
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