Buy Best Company Sells Personal Computers for $2,300 Each

question 98

Essay

Buy Best Company sells personal computers for $2,300 each.The price includes a two-year warranty.During 2015,the company sells 600 computers.On the basis of past experience,the warranty costs are estimated to be $150 per computer.The actual warranty costs paid by Buy Best during 2015 were $45,000.Prepare general journal entries to record the estimated warranty expense and the warranty payments during 2015.

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Definitions:

Principal Incapacitated

Principal incapacitated refers to a situation where the principal party in a legal or financial agreement is unable to make decisions or fulfill their role, due to physical or mental incapacity.

Legal Status

The condition of an entity or individual’s standing in the eyes of the law, including rights, responsibilities, and current liabilities.

Power of Agent

The legal authority granted to an individual (agent) to make decisions and take actions on behalf of another person or entity (principal).

Recruiting System

A structured process or set of tools used by organizations to find, attract, and hire new employees.