Asked by Rajkamal Singh on May 23, 2024
Verified
Nelson Industries warrants its products for one year. The estimated product warranty is 4.3% of sales. Sales were $475,000 for September. In October, a customer received warranty repairs requiring $215 of parts and $65 of labor.
(a)Journalize the adjusting entry required at September 30, the end of the first month of the current year, to record the estimated product warranty expense.(b)Journalize the entry to record the warranty work provided in October.
Product Warranty
A guarantee provided by a seller that a product will meet certain performance and quality standards or will be repaired or replaced within a certain period.
Warranty Repairs
Services provided to repair or replace products that fail to meet certain standards or conditions specified in a warranty agreement.
Adjusting Entry
Journal entries made in accounting at the end of an accounting period to allocate income and expenditures to the period in which they actually occurred.
- Compute, record, and comprehend the obligations associated with product warranties and their influence on financial reports.
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Learning Objectives
- Compute, record, and comprehend the obligations associated with product warranties and their influence on financial reports.
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