Question 1 [30 points]

On November 4, Velor Inc. began to buy and resell radios for $50 each. Velor Inc. uses the perpetual method to account for inventories. The radios are covered under a warranty that requires the company to replace any defective radio within 90 days. When a radio 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 radio

Question 1 [30 points] On November 4, Velor Inc. began to buy and resell radios for $50 each. Velor Inc. uses the perpetual method to account for inventories. The radios are covered under a warranty that requires the company to replace any defective radio within 90 days. When a radio 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 radio is only $18. The manufacturer has advised the company to expect warranty costs to equal 15% of the units sold. Record the following transactions in the journal provided. Record transaction letters as descriptions. Enter the dates in the format dd/mmm (ie. 15/Jan). General Journal Account/Explanation Page Gj1 F Debit Credit Date a. November 5: 180 radios were sold for cash. b. November 30: The warranty expense for the month of November was recognized with an adjusting entry c. December 3: 12 radios that were returned under warranty were replaced. d. December 5: Sold 200 radios for cash. e. December 27: 15 radios that were returned under warranty were replaced. f. December 31 : The warranty expense for the month of December was recognized with an adjusting entry