Question

5. During April, Koduck Cameras sold 150 instant cameras for $100 each. Each camera had cost Koduck $60 to manufacture, and carried a one-year warranty. If 4% typically need to be replaced over the warranty period, and two are actually replaced during April, for what amount in April should Koduck debit Warranty Expense?

     a. $600         c. $240

     b. $360         d. $120

I just put #5 there for question #6. i already have the answer for it.

6. Refer to number 5 above. The journal entry to be recorded when two of the units were actually replaced during the month would include:

a. a credit to Cash for $200

b. a debit to Estimated Warranty Liability for $120

c. a debit to Warranty Expense for $120

d. a credit to Inventory for $200

Answer 1

Date	Account titles and Explanation	Debit (in $ )	Credit (in $ )
April	Warranty Expense ( 150 cameras x $ 60 x 4% )	$ 360
	Estimated Warranty Liability		$ 360
	(To record the Warranty expense)
	Option (b) is Correct - $ 360
April	Estimated Warranty Liability ( 2 x $ 60)	$ 120
	Inventory		$ 120
	(To record replacement)
	Option (b) is Correct a debit to Estimated Warranty Liability for $120