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Question 1 [30 points]

On December 4, Segura Corporation began to buy and resell toasters for $38 each. Segura Corporation uses the perpetual method to account for inventories. The toasters are covered under a warranty that requires the company to replace any defective toaster within 90 days. When a toaster 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 toaster is only $11. 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).

1. December 6 : 160 toasters were sold for $6,080 cash.
2. December 31 : Recognized warranty expense for December with an adjusting entry.
3. January 2 : 10 toasters that were returned under warranty were replaced.
4. January 8 : Sold 120 toasters for cash.
5. January 24 : 13 toasters that were returned under warranty were replaced.
6. January 31 : Recognized warranty expense for January with an adjusting entry.