Question
On January 1, 2019, Sandhill Company began a warranty program to stimulate sales. It is estimated that 5% of the units sold will be returned
On January 1, 2019, Sandhill Company began a warranty program to stimulate sales. It is estimated that 5% of the units sold will be returned for repair at an estimated cost of $38 per unit. Sales and warranty figures for the three years ended December 31 are as follows:
2019 | 2020 | 2021 | |||||||
Sales (units) | 1,800 | 2,000 | 1,200 | ||||||
Sales price per unit | $250 | $285 | $175 | ||||||
Units returned for repair under warranty | 95 | 120 | 125 | ||||||
Actual warranty costs | $3,420 | $3,326 | $2,150 |
Calculate the warranty expense for each year and warranty liability at the end of each year.
Warranty Expense | Warranty Liability | |||
2019 | $ | $ | ||
2020 | $ | $ | ||
2021 | $ | $ |
eTextbook and Media
List of Accounts
Record the warranty transactions for each year. Credit Repair Parts Inventory for the actual warranty costs. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)
Date | Account Titles and Explanation | Debit | Credit |
2019 | |||
(To record honouring warranty contracts.) | |||
(To accrue warranty expense.) | |||
2020 | |||
(To record honouring warranty contracts.) | |||
(To accrue warranty expense.) | |||
2021 | |||
(To record honouring warranty contracts.) | |||
(To accrue warranty expense.) |
eTextbook and Media
List of Accounts
To date, what percentage of the units sold have been returned for repair under warranty? What has been the average actual warranty cost per unit for the three-year period? (Round percentage of units returned answer to 2 decimal place, e.g. 52.73% and average warranty cost per unit to 2 decimal places, e.g. 52.76.)
Percentage of units returned for repair | % | ||
Average actual warranty cost per unit | $ |
eTextbook and Media
List of Accounts
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started