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ount to 3% of product sales. As it sells quality pro come back for repairs. So, it allocates only $5,00

ount to 3% of product sales. As it sells quality pro come back for repairs. So, it allocates only $5,00

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Must Buy sells electronic items to its customers. In a particular year, the sales were $226,000. It also sold product warranties (on a 2 year warranty) which amount to 3% of product sales. As it sells quality products, not many customers come back for repairs. So, it allocates only $5,000 per year toards repair costs. Must Buy spent Rs.890 in the first year and $865 in the second year on warranty repairs. Please prepare all necessary entries to record the transactions in both years
Transcribed Image Text:Must Buy sells electronic items to its customers. In a particular year, the sales were $226,000. It also sold product warranties (on a 2 year warranty) which amount to 3% of product sales. As it sells quality products, not many customers come back for repairs. So, it allocates only $5,000 per year toards repair costs. Must Buy spent Rs.890 in the first year and $865 in the second year on warranty repairs. Please prepare all necessary entries to record the transactions in both years
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