Recording and Reporting Warranties During 2020, Ward Company introduced a new product carrying a two-year...
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Recording and Reporting Warranties During 2020, Ward Company introduced a new product carrying a two-year warranty against defects, which is included in the selling price of the product. The estimated warranty costs are 2% of sales within the first 12 months following the sale and 4% in the second 12 months following the sale. Sales and actual warranty expenditures for the years ended December 31, 2020, and 2021 are: Actual Warranty Sales Expenditures 2020 $720,000 $10,800 2021 1,200,000 36,000 $1,920,000 $46,800 a. At December 31, 2020, what would Ward report as estimated warranty liability on its balance sheet? b. Record the journal entries on December 31, 2020. Account Name Dr. Cr. Date Dec 31, 2020 To accrue for warranty expense Dec 31, 2020 To record actual warranty costs C. At December 31, 2021, what would Ward report as estimated warranty liability on its balance sheet? d. Record the journal entries required on December 31, 2021. Account Name Dr. Cr. Date Dec 31, 2021 To accrue for warranty expense Dec 31, 2021 To record actual warranty costs
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