Question
On November 10, 2017, Singh Electronics began to buy and resell scanners for $47 each. Singh uses the perpetual system to account for inventories. The
On November 10, 2017, Singh Electronics began to buy and resell scanners for $47 each. Singh uses the perpetual system to account for inventories. The scanners are covered under a warranty that requires the company to replace any non-working scanner within 90 days. When a scanner is returned, the company simply throws it away and mails a new one from inventory to the customer. The companys cost for a new scanner is only $27. Singh estimates warranty costs based on 15% of the number of units sold. The following transactions occurred in 2017 and 2018 (ignore GST and PST):
2017 | ||
Nov. | 15 | Sold 4,000 scanners for $188,000 cash. |
30 | Recognized warranty expense for November with an adjusting entry. | |
Dec. | 8 | Replaced 280 scanners that were returned under the warranty. |
15 | Sold 6,800 scanners. | |
29 | Replaced 66 scanners that were returned under the warranty. | |
31 | Recognized warranty expense for December with an adjusting entry. | |
2018 | ||
Jan. | 14 | Sold 340 scanners. |
20 | Replaced 88 scanners that were returned under the warranty. | |
31 | Recognized warranty expense for January with an adjusting entry. |
Required: 1. How much warranty expense should be reported for November and December 2017?
|
2. How much warranty expense should be reported for January 2018? (Round your intermediate calculations and final answer to the nearest whole number.) 3. What is the balance of the estimated warranty liability as of December 31, 2017?
|
4. What is the balance of the estimated warranty liability as of January 31, 2018?
|
5. Prepare journal entries to record ALL transactions and year-end adjustments (ignore sales taxes).
1.Record the sale of scanners to customers.
2.Record the cost of the November 15 sale.
3.Record the scanner warranty expense and liability at 15% of the units sold.
4.Record the cost of scanner warranty replacements.
5.Record the sale of scanners to customers.
6.Record the cost of the December 15 sale.
7.Record the cost of scanners warranty replacements.
8.Record the scanner warranty expense and liability at 15% of the units sold.
9.Record the sale of scanners to customers.
10.Record the cost of the January 14 sale.
11.Record the cost of scanner warranty replacements.
12.Record the scanner warranty expense and liability at 15% of the units sold.
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