Chisholm Appliances Is a Relatively New Producer of Commercial Grade

question 54

Essay

Chisholm Appliances is a relatively new producer of commercial grade appliances.To enhance the competitiveness of its products,on July 1,2018,the company introduced a warranty against defects for 12 months from the date of installation.
No warranty claims were received in 2018.However,in February 2020,when the auditors examined the records for the year ended December 31,2019,they noted $255,000 of warranty claims relating to 2019 recorded as miscellaneous expense.The auditors requested the company to accrue for the expected warranty costs retrospectively to 2018.
The auditors agreed with Chisholm's management that the estimated warranty fulfillment costs should be 0.5% of revenue.The company recorded revenue of $55,598,000 in 2018 and $56,213,000 in 2019.The company's tax rate is 30%.The general ledger for 2019 has not yet been closed.
Required:
Record any adjusting journal entries required to correct Chisholm's books.Include the effect of income taxes.

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Definitions:

Household Tasks

Refers to the routine chores and duties performed in managing a household, such as cleaning, cooking, and maintenance.

Married Women

Women who are legally united in marriage to a spouse and may be experiencing various social, legal, and emotional implications due to this status.

Gays

Individuals who are sexually attracted to members of the same sex; also used more broadly to refer to the LGBTQ+ community.

Lesbians

Women who are romantically and sexually attracted to other women.