Hardin Widget Manufacturing Began Operations in January 2018

question 59

Essay

Hardin Widget Manufacturing began operations in January 2018. Hardin sells widgets that carry a two-year manufacturer's warranty against defects in workmanship. Hardin's management projects 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 2018 and 2019 are as follows:
2018: Sold 200 widgets on account; incurred warranty expenditures of $300.
2019: 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 2018.
2. Prepare journal entries that summarize the sales and any aspects of the warranty for 2019.

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Definitions:

Linear Model

A statistical model used to describe the relationship between one or more explanatory variables and a continuous response variable by a linear equation.

Scatterplot

A graphical representation that uses dots to show the relationship between two sets of data.

Data Points

Individual pieces of factual information collected for analysis.

United States

A country located in North America, comprising 50 states, a federal district, five major self-governing territories, and various possessions.