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Problem -5 On October 6, 2023, Norwood Co, an office...

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Accounting

Problem -5
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On October 6, 2023, Norwood Co, an office equipment supplier, sold a copier for cash of $21,000(cost$13,900) with a two-year parts and labour warranty. Based on prior experience, Norwood expects eventually to incur warranty costs equal to 6% of the selling price. The fiscal year coincides with the calendar year. On January 15, 2024, the customer returned the copier for repairs that were completed the same day. The cost of the repairs consisted of $400 for the materials taken from the parts inventory and $550 of labour that was fully paid with cash. These were the only repairs required in 2024 for this copier. Required: 1. How much warranty expense should the company report in 2023 for this copier? 2. How much is the warranty Hability for this copier as of December 31,2023 ? 3. How much warranty expense should the company report in 2024 for this copier? 4. How much is the warranty liability for this copier as of December 31,2024? 5. Prepare the journal entries that would be made to record (a) the sale (assume a perpetual inventory system): (b) the adjustment on December 31, 2023, to record the warranty expense; and (c) the repairs that occurred in January 2024. Ignore sales taxes

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