Question
On May 1, 2020, ABC co. started merchandising business. ABC sells product with a 3 month warranty. Management estimates that the average cost of repairing
On May 1, 2020, ABC co. started merchandising business. ABC sells product with a 3 month warranty. Management estimates that the average cost of repairing a defective unit is $16. The manufacturer of product has advised ABC to expect warranty costs to equal 10% of dollar sales. Journalize the following transactions.
May 15 Sold 50 units for $4,000 cash.
June 12 Sold 20 units for $1,600 cash.
June 30 Estimated liability for warranties related to May and June sales.
July 10 Repaired 10 products that were received under the warranty claim.
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Intermediate Accounting
Authors: Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfiel
17th edition
1119503663, 1119571480, 1-119-50368-2, 111950368X, 978-1119503668
