Marx Company Sells Exercise Machines for Home Use

question 64

Essay

Marx Company sells exercise machines for home use. The machines carry a 2-year warranty. Past experience indicates that 6% of the units sold will be returned during the warranty period for repairs. The average cost of repairs under warranty is $60 for labor and $90 for parts per unit. During 2010, 2,500 exercise machines were sold at an average price of $800. During the year, 60 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 estimated warranty expense for the year.

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Definitions:

Overt-Destructive

Behavior that is openly aggressive or harmful, typically observable and measurable by others.

Covert Destructive

Behaviors or actions that are hidden or secretive in nature but result in harm or damage either to oneself or others.

Conduct Disorder

A range of antisocial types of behavior displayed in childhood or adolescence.

Conduct Disorder

A mental disorder diagnosed in childhood or adolescence characterized by a persistent pattern of behavior that violates the rights of others or societal norms.