Sandra Sikes Sells Exercise Machines for Home Use

question 155

Essay

Sandra Sikes sells exercise machines for home use. The machines carry a 2-year warranty. Past experience indicates that 5% of the units sold will be returned during the warranty period for repairs. The average cost of repairs under warranty is $40 for labor and $50 for parts per unit. During 2014, 3,000 exercise machines were sold at an average price of $800. During the year, 95 of the machines that were sold were repaired at the average price per unit.
Instructions
(a) Prepare the journal entry to record the repairs made under warranty.
(b) Prepare the journal entry to record the warranty expense for the year.

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Definitions:

Bisacodyl

A laxative medication used to treat constipation by stimulating bowel movements.

Fecal Impaction

A medical condition where hardened stool becomes stuck in the colon or rectum, leading to difficulty and discomfort in passing bowel movements.

Liquid Fecal Seepage

The involuntary leakage of liquid fecal matter, often associated with conditions affecting the lower gastrointestinal tract.