A Company Sells Sofas with a 6-Month Warranty

question 86

Essay

A company sells sofas with a 6-month warranty.In January,the company sold 100,000 sofas at $1,750 each;and 500 sofas needed repairs during that same month.The total repairs amounted to $85,000 costs from the upholstery materials inventory.It is estimated that 2% of all units sold will need repairs under warranty at an estimated cost of $200 per unit.Prepare the journal entries to record (a)estimated warranty expense for January and (b)warranty repair costs for January.

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Definitions:

Suppliers

Businesses or individuals that provide goods or services to another entity within the supply chain.

Moped Scooter

A two-wheeled vehicle powered by a small engine, designed for economical transportation and requiring minimal licensing in many jurisdictions.

Internet Access

The ability to connect to the internet, enabling users to browse the web, send emails, and access online services.

Communicate

The act of conveying information or expressing ideas and emotions through speech, writing, or other forms of interaction.