Woodmier Lawn Products introduced a new line of commercial sprinklers in 2023 that carry a one-year warranty against manufacturer's defects. Because this was the first product for which the company offered a warranty, trade publications were consulted to determine the experience of others in the industry. Based on that experience, warranty costs were expected to approximate 2% of sales. Sales of the sprinklers in 2023 were $2.8 million. Accordingly, the following entries relating to the contingency for warranty costs were recorded during the first year of selling the product: Credit General Journal Accrued liability and expense Warranty expense (2% x $2,800,000) Warranty liability Actual expenditures (summary entry) Warranty liability Cash Debit 56,000 25,000 56,000 25,000 In late 2024, the company's claims experience was evaluated and it was determined that claims were far more than expected-3% of sales rather than 2%. View transaction list Required: 1. Assuming sales of the sprinklers in 2024 were $3.9 million and warranty expenditures in 2024 totaled $91,000, prepare any journal entries related to the warranty. 2. Assuming sales of the sprinklers were discontinued after 2023, prepare any journal entry(s) in 2024 related to the warranty. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Assuming sales of the sprinklers in 2024 were $3.9 million and warranty expenditures in 2024 totaled $91,000, prepare any journal entries related to the warranty. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in whole dollars. Show less A

3

Das Medical introduced a new implant that carries a five-year warranty against manufacturer's defects. Based on industry experience with similar product introductions, warranty costs are expected to approximate 2% of sales. Sales were $21 million and actual warranty expenditures were $31,750 for the first year of selling the product. Complete the following T-account to determine the amount (if any) Das should report as a liability at the end of the year. Note: Enter your answers in whole dollars. Beginning Balance Ending Balance Debit Warranty Liability Credit

Adams, Inc. sells widgets that come with an unconditional five-year warranty. According to Adams' best estimates, 7.8% of all units sold will require repair or replacement under that warranty, and the average cost of honoring one warranty claim is $60. During 2023, Adams' first year of operations, 176,000 widgets were sold, 1,278 of which were repaired or replaced under warranty claims. On its December 31, 2023 balance sheet, what amount of warranty liability will Adams report?

During 2020, the Thomas Company began selling a new type of machine that carries a two-year assurance-type warranty against all defects. Based on past industry and company experience, estimated warranty costs should total $1,000 per machine sold. During 2020, sales and actual warranty expenditures were $5,000,000 (100 machines) and $44,000, respectively. Thomas uses the GAAP approach of accruing warranty expense (and the related liability) in the year of the sale.

Das Medical introduced a new implant that carries a five-year warranty against manufacturer's defects. Based on industry experience with similar product introductions, warranty costs are expected to approximate 3% of sales. Sales were $9 million and actual warranty expenditures were $38,750 for the first year of selling the product. Complete the following T-account to determine the amount (if any) Das should report as a liability at the end of the year. Note: Enter your answers in whole dollars. Debit Beginning Balance Actual expenditures Ending Balance Answer is not complete. Warranty Liability 0 -11,750 38,750 → 27,000 0 -27,000 Credit Warranty expense

1. ProWasher began production of a new dishwasher in June 2023, and by December 31, 2023 had sold 100,000 units to various retailers for $500 each. Each dishwasher is sold with a one-year warranty included. The company estimates that its warranty expense per dishwasher will amount to $25. Warranties similar to these are available for sale for $75. By year end, the company had already paid out $1 million in warranty expenditures on 35,000 units. ProWasher’s records currently show a warranty expense of $1 million for 2023. 2. ProWasher’s retail division rents space from Park Malls. ProWasher pays a rental fee of $6,000 per month plus 5% on the amount of yearly profits that is over $500,000. ProWasher’s CEO, Burt D. Washer, tells you that he had instructed the previous accountant to increase the estimate of bad debts expense and several other estimates in order to keep the retail division’s profits at $475,000. 3. ProWasher’s lawyer, Anna Turney, informed you that ProWasher has a…