Ivanhoe Inc. began selling game consoles on November $1,2024.$ The company offers a $60-$day

warranty for defective merchandise. Based on past experience with other similar products,

Ivanhoe estimates that $2\mathrm{.}50\%$ of the units sold will become defective in the warranty period,

and that the average cost of replacing or repairing a defective unit is $$20.$ In November,

Ivanhoe sold $42,000$ units and $510$ defective units were returned. In December, Ivanhoe sold

$35,000$ units and $780$ defective units were returned. The actual cost of replacing the defective

units was $$20,640.$

Prepare a journal entry to accrue for the estimated warranty costs for the November and

December sales at December $31,2024.$

Prepare one summary journal entry at December $31,2024,$ to record the cost of replacing

the defective game consoles returned during November and December.

What amounts will be included in Ivanhoe's $2024$ income statement and balance sheet at

December $31,2024,$ with regard to the warranty?

IVANHOE COMPANY

Income Statement$($Partial$)$

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IVANHOE COMPANY

Balance Sheet$($Partial$)$