Question
On November 10, 2020, Singh Electronics began to buy and resell scanners for $58 each. Singh uses the perpetual system to account for inventories. The
On November 10, 2020, Singh Electronics began to buy and resell scanners for $58 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 $38. Singh estimates warranty costs based on 16% of the number of units sold. The following transactions occurred in 2020 and 2021 (ignore GST and PST):
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On November 10, 2020, Singh Electronics began to buy and resell scanners for $58 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 company's cost for a new scanner is only $38. Singh estimates warranty costs based on 16% of the number of units sold. The following transactions occurred in 2020 and 2021 (ignore GST and PST): Nov. Dec. 2020 15 Sold 2,500 scanners for $145,000 cash. 30 Recognized warranty expense for November with an adjusting entry. 8 Replaced 180 scanners that were returned under the warranty. 15 Sold 5,500 scanners. 29 Replaced 46 scanners that were returned under the warranty. 31 Recognized warranty expense for December with an adjusting entry. 2021 14 Sold 275 scanners. 20 Replaced 68 nners that ere returned under the warranty. 31 Recognized warranty expense for January with an adjusting entry. Jan. Required: 1. How much warranty expense should be reported for November and December 2020? November Warranty Expense $ 15,200 33,440 $ 48,640 PI December Total 2. How much warranty expense should be reported for January 2021? (Round your intermediate calculations and final answer to the nearest whole number.) Warranty expense $ 1,672 3. What is the balance of the estimated warranty liability as of December 31, 2020? Warranty expense for November Warranty expense for December Cost of replacing items in December Liability balance $ 15,200 credit 33,440 credit debit credit 4. What is the balance of the estimated warranty liability as of January 31, 2021? Beginning balance Warranty expense for January Cost of replacing items in January Liability balance 5. Prepare journal entries to record ALL transactions and year-end adjustments (ignore sales taxes). (Round intermediate calculations and final answer to the nearest whole number.) View transaction list X 12 > 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 16% of the units sold. 4 Record the cost of scanner warranty replacements. Record the sale of scanners to customers. Credit 5 00 6 Record the cost of the December 15 sale. 145,000 7 Record the cost of scanners warranty replacements. Note : = journal entry has been entered Record entry Clear entry View general Journal 5. Prepare journal entries to record ALL transactions and year-end adjustments (ignore sales taxes). (Round intermediate calculations and final answer to the nearest whole number.) View transaction list 6 Record the cost of the December 15 sale. 12 > 7 Record the cost of scanners warranty replacements. 8 Record the scanner warranty expense and liability at 16% of the units sold. 9 Record the sale of scanners to customers. 10 Record the cost of the January 14 sale. Credit DO 11 Record the cost of scanner warranty replacements. 145,000 12 Record the scanner warranty expense and liability at 16% of the units sold. Note : journal entry has been entered Record entry Clear entry View general journalStep by Step Solution
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