FINANCIAL ACCOUNTING
6th Edition
ISBN: 9781618533111
Author: DYCKMAN
Publisher: Cambridge Business Publishers
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Chapter 3, Problem 5MC
To determine
Compute the revenue during the month of November.
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Oven Roasted sold $321,000 of consumer electronics during July under a two-year warranty. The cost to repair defects under the warranty is estimated at 5% of the sales price. On November 11, a customer was given $97 cash under terms of the warranty.
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a. Provide the journal entry for the estimated warranty expense on July 31 for July sales. If an amount box does not require an entry, leave it blank.
Date
Account
Debit
Credit
July 31
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b. Provide the journal entry for the November 11 cash payment. If an amount box does not require an entry, leave it blank.
Date
Account
Debit
Credit
Nov. 11
Heights Electronics sell its products on credit. It usually provides 6% of its total sales as
allowance for bad and doubtful debts.
In the month of June 20x1, Heights Electronics recorded $270,000 as sales. During the month
it became known that $9,000 worth of Account Receivable will not be collected.
It also received news that $3,200 worth of invoices written-off in the previous year are now
collectible.
You are required to:
a) provide journal entries based on the information provided by Norma Electronics and
b) provide the closing balance in Allowance for bad and doubtful account, assuming there
was no opening balance.
On October 29, Lobo Company began operations by purchasing razors for resale. The razors have a 90-day warranty.
When a razor is returned, the company discards it and mails a new one from Merchandise Inventory to the customer. The
company's cost per new razor is $16 and its retail selling price is $70. The company expects warranty costs to equal 5% of
dollar sales. The following transactions occurred.
November 11 Sold 60 razors for $4,200 cash..
November 30 Recognized warranty expense related to November sales with an adjusting entry.
Replaced 12 razors that were returned under the warranty.
Sold 180 razors for $12,600 cash.
December 9
December 16
December 29
December 31
Replaced 24 razors that were returned under the warranty.
Recognized warranty expense related to December sales with an adjusting entry.
Sold 120 razors for $8,400 cash.
January 5
January 17 Replaced 29 razors that were returned under the warranty.
January 31 Recognized warranty expense related to January sales with an…
Chapter 3 Solutions
FINANCIAL ACCOUNTING
Ch. 3 - Prob. 1MCCh. 3 - Prob. 2MCCh. 3 - Prob. 3MCCh. 3 - Prob. 4MCCh. 3 - Prob. 5MCCh. 3 - Prob. 1QCh. 3 - Prob. 2QCh. 3 - Prob. 3QCh. 3 - Prob. 4QCh. 3 - Prob. 5Q
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