Sandra Sikes Sells Exercise Machines for Home Use

question 34

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 2018, 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 estimated warranty expense for the year.

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Definitions:

Forced Vomiting

The act of deliberately inducing vomiting, often as a symptom of an eating disorder.

Bulimia

An eating disorder characterized by binge eating followed by purging, such as vomiting or using laxatives, to prevent weight gain.

Overweight

Having more body fat than is optimally healthy, often defined as a body mass index (BMI) over the normal range.

American Adults

Individuals over the age of 18 living in the United States, encompassing a diverse range of backgrounds, cultures, and lifestyles.