Urban Inc. has sales of $45,000 during January and a 90 day warranty on all products sold. It is estimated 3% of January sales will require warranty repairs. What is the journal entry on January 31 to accrue for warranty costs? Debit Accrued Warranty Payable $1,350; Credit Warranty Expense $1,350 Debit Accrued Warranty Payable $45,000; Credit Warranty Expense $45,000 O Debit Warranty Expense $45,000; Credit Accrued Warranty Payable $45,000 Debit Warranty Expense $1,350; Credit Accrued Warranty Payable $1,350

Urban Inc. has sales of $45,000 during January and a 90 day warranty on all products sold. It is estimated 3% of January sales will require warranty repairs. What is the journal entry on January 31 to accrue for warranty costs? Debit Accrued Warranty Payable $1,350; Credit Warranty Expense $1,350 Debit Accrued Warranty Payable $45,000; Credit Warranty Expense $45,000 O Debit Warranty Expense $45,000; Credit Accrued Warranty Payable $45,000 Debit Warranty Expense $1,350; Credit Accrued Warranty Payable $1,350

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter9: Current Liabilities And Contingent Obligations

Section: Chapter Questions

Problem 10RE

See similar textbooks

Similar questions

Chemical Enterprises issues a note in the amount of $156,000 to a customer on January 1, 2018. Terms of the note show a maturity date of 36 months, and an annual interest rate of 8%. What is the accumulated interest entry if 9 months have passed since note establishment?
Blake Department Store sells television sets with one-year warranties that cover repair and replacement of television parts. In the month of June, Blake sells forty television sets with a per unit cost of $500. If Blake estimates warranty fulfillment at 10% of sales, what would be the warranty liability reported in June? A. $1,000 B. $2,000 C. $500 D. $20,000
On December 1 of the current year, Jordan Inc. assigns 125,000 of its accounts receivable to McLaughlin Company for cash. McLaughlin Company charges a 750 service fee, advances 85% of Jordans accounts receivable, and charges an annual interest rate of 9% on any outstanding loan balance. Prepare the related journal entries for Jordan.
On December 1 of the current year, Jordan Inc. assigns 125,000 of its accounts receivable to McLaughlin Company for cash. McLaughlin Company charges a 750 service fee, advances 85% of Jordans accounts receivable, and charges an annual interest rate of 9% on any outstanding loan balance. Prepare the related journal entries for Jordan. Refer to RE6-10. On December 31, Jordan Inc. received 50,000 on assigned accounts. Prepare Jordans journal entries to record the cash receipt and the payment to McLaughlin.
A customer takes out a loan of $130,000 on January 1, with a maturity date of 36 months, and an annual interest rate of 11%. If 6 months have passed since note establishment, what would be the recorded interest figure at that time? A. $7,150 B. $65,000 C. $14,300 D. $2,383
Jain Enterprises honors a short-term note payable. Principal on the note is $425,000, with an annual interest rate of 3.5%, due in 6 months. What journal entry is created when Jain honors the note?
Emperor Pool Services provides pool cleaning and maintenance services to residential clients. It offers a one-year warranty on all services. Review each of the transactions, and prepare any necessary journal entries for each situation. A. March 31: Emperor provides cleaning services for fifteen pools during the month of March at a sales price per pool of $550 cash. Emperor records warranty estimates when sales are recognized and bases warranty estimates on 2% of sales. B. April 5: A customer files a warranty claim that Emperor honors in the amount of $100 cash. C. April 13: Another customer, J. Jones, files a warranty claim that Emperor does not honor due to customer negligence. D. June 8: J. Jones files a lawsuit requesting damages related to the dishonored warranty in the amount of $1,500. Emperor determines that the lawsuit is likely to end in the plaintiffs favor and the $1,500 is a reasonable estimate for damages.
During June, Vixen Company sells $850,000 in merchandise that has a one year warranty. Experience shows that warranty expenses average about 3% of the selling price. Customers returned $14,000 of merchandise for warranty replacement during the month. The entry to record the estimated warranty provision at the end of the month is: Multiple Choice A) Debit Warranty Expense $11,500; credit Estimated Warranty Liability $11,500. B) Debit Warranty Expense $14,000; credit Estimated Warranty Liability $14,000. C) Debit Warranty Expense $25,500; credit Estimated Warranty Liability $25,500. D) Debit Estimated Warranty Liability $14,000; credit Warranty Expense $14,000. E) Debit Estimated Warranty Liability $11,500; credit Warranty Expense $11,500.
monthly sales are 480,000 Warranty costs are estimated at 6% of monthly sales. Warranties are honored with replacement products No defective products are returned during the month. At the end of the month the company should record a journal entry with a credit to -sales for 28,800 -inventory for 28,800 -warranty expense for 28,800 -estimated warranty payable for 28,800
Hall Company sells merchandise with a one-year warranty. In the current year, sales consisted of 2,392 units. It is estimated that warranty repairs will average $17 per unit sold, and 30% of the repairs will be made in the current year and 70% in the next year. In the current year's income statement, Hall should show warranty expense of Oa. $40,664 Ob. so Oc. $28,465 Od. $12,199
Nance Company estimates its annual warranty expense as 2% of annual net sales. The following data relate to the calendar year 2012: Net sales $1,500,000 Warranty liability account Balance, Dec. 31, 2012 $10,000 debit before adjustment Balance, Dec. 31, 2012 50,000 credit after adjustment Which one of the following entries was made to record the 2012 estimated warranty expense? Group of answer choices DR. Warranty Expense 30,000 CR. Retained Earnings (prior-period adjustment) 5,000 CR. Warranty Liability 25,000 DR. Warranty Expense 25,000 DR. Retained Earnings (prior-period adjustment) 5,000 CR. Warranty Liability 30,000 DR. Warranty Expense 20,000 CR. Warranty Liability 20,000 DR. Warranty Expense 30,000 CR. Warranty Liability 30,000
A company sold 10,000 TVs in July and estimates warranty expense for these TVs to be $25,000. During July, 80 TVs were serviced under warranty at a cost of $18,000. The credit balance in the Estimated Warranty Liability account at July 1 was $26,000. What is the company’s warranty expense for the month of July? Group of answer choices $51,000 b. $1,000 c. $25,000 d. $33,000 e. $18,000