Hardin Widget Manufacturing Began Operations in January 2009

question 101

Essay

Hardin Widget Manufacturing began operations in January 2009. Hardin sells widgets that carry a two-year manufacturer's warranty against defects in workmanship. Hardin's management project that 2% of the widgets will require repair during the first year of the warranty while approximately 6% will require repair during the second year of the warranty. The widgets sell for $400 each. The average cost to repair a widget is $50. The company sells 60% of the widgets to retail customers who must pay a 6% sales tax. Sales and warranty information for 2009 and 2010 are as follows:
2009: Sold 200 widgets on account; incurred warranty expenditures of $300.
2010: Sold 300 widgets on account; actual warranty expenditures were $500.
Required:
1. Prepare journal entries that summarize the sales and any aspects of the warranty for 2009.
2. Prepare journal entries that summarize the sales and any aspects of the warranty for 2010.

---

Definitions:

Auditory Fluids

Liquids found within the ear, vital for the process of hearing; includes perilymph and endolymph.

Ossicles

Small bones, particularly the three in the middle ear (malleus, incus, and stapes) that aid in hearing by transmitting sound vibrations.

Audiogram

a graphical representation of a person's hearing ability, plotting the threshold of hearing for various frequencies against volume level.

-gram

A suffix denoting something written or recorded in a specified way, often used in medical and scientific terminology.