Southwest Company Records Indicate That January Sales on Account Were

question 3

Essay

Southwest Company records indicate that January sales on account were $109,000.The company's management estimates warranty expense to be 3.6% of sales.Prepare the journal entry to record warranty expense.Omit explanation.

---

Definitions:

Residual Income

The income that remains after subtracting all required costs of capital from the operating income; a measure of net profitability.

Minimum Required Rate of Return

The least return expected by investors for assuming the risk of investing in a project or security.

Performance of Divisions

Evaluation of the efficiency, productivity, and profitability of different segments or units within an organization, often used for internal assessment and strategy formulation.

Residual Income

A profitability measure that subtracts an opportunity cost for capital from the profits generated.