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nov.6 Chap.9 #2 manual hw Problem 2 - Warranty Expense -...

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Accounting

nov.6 Chap.9 #2 manual hw
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Problem 2 - Warranty Expense - Apple sells a laptop (that costs $600 ) for $1,000 cash with a two-year parts warranty to a customer on September 20 of Year 1. Apple expects warranty costs to be 5% of dollar sales. It records warranty expense with an adjusting entry on December 31 . On January 6 of Year 2 , the laptop requires onsite repairs that are completed on the same day. The repair costs $47 for materials taken from the Parts Inventory. These are the only repairs required in Year 2 for this laptop. 1. How much warranty expense does the company report for this laptop in Year 1 ? 2. How much is the estimated warranty liability for the laptop as of December 31 of Year 1 ? 3. How much is the estimated warranty liability for the laptop as of December 31 of Year 2 ? 4. Prepare journal entries to record (a) the laptop's sale; (b) the adjustment to recognize the warranty expense on December 31 of Year 1 ; and (c) the repairs that occur on January 6 of Year 2

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