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CHAPTER 10 Current Liabilities Problem 10-3A Estimated product warranty llabilities LO4 CHECK FIGURES: 2. $1,750; 3.$40,600; 4. $40,145 On November 10, 2017, 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 follow ing transactions occurred in 2017 and 2018 (ignore GST and PST): 2017 15 30 Recognized warranty expense for November with an adjusting entry 8 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 Nov. Sold 2,000 scanners for $110,000 cash. Dec. Replaced 150 scanners that were returned under the warranty. 2018 Jan. 14 Sold 275 scanners. 20 31 Replaced 63 scanners that were returned under the warranty. 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? 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 the transactions and adjustments (ignore sales taxes)