Nelson Industries Warrants Its Products for One Year

question 81

Essay

Nelson Industries warrants its products for one year. The estimated product warranty is 4.3% of sales. Sales were $475,000 for September. In October, a customer received warranty repairs requiring $215 of parts and $65 of labor.​
(a)Journalize the adjusting entry required at September 30, the end of the first month of the current year, to record the estimated product warranty expense.
(b)Journalize the entry to record the warranty work provided in October.​​

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Definitions:

Automobile Industry

The automobile industry encompasses a wide range of companies and organizations involved in the design, manufacturing, and marketing of motor vehicles, including cars, trucks, and motorcycles.

Cigarette Industry

Refers to the global sector involved in the manufacturing, marketing, and sale of cigarettes and related products.

Concentration Ratio

A measure used in economics to assess the degree of market concentration, reflecting the market share of the largest firms.

Oligopolization

describes the process whereby a market becomes dominated by a few large companies, reducing competition.