Answered step by step
Verified Expert Solution
Question
1 Approved Answer
On November 10, 2020, Singh Electronics began to buy and resell scanners for $55 each. Singh uses the perpetual system to account for inventories. The
On November 10, 2020, Singh Electronics began to buy and resell scanners for $55 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 $35. Singh estimates warranty costs based on 18% of the number of units sold. The following transactions occurred in 2020 and 2021 (ignore GST and PST): 2020 Nov. Dec. 15 Sold 2,000 scanners for $110,000 cash 30 Recognized warranty expense for November with an adjusting entry. 8 Replaced 150 scanners that were returned under the warranty. 15 Sold 5,500 scanners. 29 Replaced 40 scanners that were returned under the warranty, 31 Recognized warranty expense for December with an adjusting entry. 2021 Jan. 14 Sold 275 scanners. 20 Replaced 63 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 2020? 2. How much warranty expense should be reported for January 2012 3. What is the balance of the estimated warranty liability as of December 31: 2020 4. What is the balance of the estimated warranty liability as of January 31, 2012 5. Prepare journal entries to record the transactions and adjustments (ignore sales aces)
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access with AI-Powered 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