Question

Madison Co. sells 13,000 scanners at a price of $250.00 each. The selling price includes a...

Madison Co. sells 13,000 scanners at a price of $250.00 each. The selling price includes a warranty (1 year) on parts. Madison expects that 4.5% of the scanners will be defective and that warranty repair costs will be $56 per unit. Complete the following: a. Journalize the sale (assume a 7.75% sales tax rate). b. Estimate, and then journalize the warranty liability.

Business   Accounting   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1
Journal Entries
Accounts title and explanation Debit $ Credit $
Accounts receivable Account Dr. 3501875
    Sales revenue (13000*250) 3250000
    Sales tax payable (3250,000*7.75%) 251875
Warranty expense Account Dr. 874250
    Warranty expense liability Account 874250
Note: Total Warranty liability:
Defective (3250000*4.50%) 146250
Repair cost (13000*56) 728000
Total Warranty liability 874250
0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Carpy Corp. sells products with included warranties and estimates warranty costs to be 2% of selling...
Carpy Corp. sells products with included warranties and estimates warranty costs to be 2% of selling price. At January 1, Carpy had a balance of $480 in its warranty liability account. During the year, Carpy sold $25,000 worth of products costing $13,000, on account, and made $510 of repairs under warranty (paid in cash). Journalize Carpy’s sales for the year, including warranties. Journalize Carpy’s warranty repairs for the year. What is the balance in Carpy’s warranty liability account at December...
Hitzu Co. sold a copier (that costs $6,500) for $13,000 cash with a two-year parts warranty...
Hitzu Co. sold a copier (that costs $6,500) for $13,000 cash with a two-year parts warranty to a customer on August 16 of Year 1. Hitzu expects warranty costs to be 3% of dollar sales. It records warranty expense with an adjusting entry on December 31. On January 5 of Year 2, the copier requires on-site repairs that are completed the same day. The repairs cost $136 for materials taken from the repair parts inventory. These are the only repairs...
[The following information applies to the questions displayed below.] Hitzu Co. sold a copier (that costs...
[The following information applies to the questions displayed below.] Hitzu Co. sold a copier (that costs $5,500) for $11,000 cash with a two-year parts warranty to a customer on August 16 of Year 1. Hitzu expects warranty costs to be 4% of dollar sales. It records warranty expense with an adjusting entry on December 31. On January 5 of Year 2, the copier requires on-site repairs that are completed the same day. The repairs cost $133 for materials taken from...
Buffalo Corporation sells computers under a 2-year warranty contract that requires the corporation to replace defective...
Buffalo Corporation sells computers under a 2-year warranty contract that requires the corporation to replace defective parts and to provide the necessary repair labor. During 2017, the corporation sells for cash 391 computers at a unit price of $2,260. On the basis of past experience, the 2-year warranty costs are estimated to be $167 for parts and $197 for labor per unit. (For simplicity, assume that all sales occurred on December 31, 2017.) The warranty is not sold separately from...
Sarasota Corporation sells computers under a 2-year warranty contract that requires the corporation to replace defective...
Sarasota Corporation sells computers under a 2-year warranty contract that requires the corporation to replace defective parts and to provide the necessary repair labor. During 2017, the corporation sells for cash 404 computers at a unit price of $2,440. On the basis of past experience, the 2-year warranty costs are estimated to be $165 for parts and $205 for labor per unit. (For simplicity, assume that all sales occurred on December 31, 2017.) The warranty is not sold separately from...
During the upcoming year De Anza Co. expects the following data: Expected unit selling price is:...
During the upcoming year De Anza Co. expects the following data: Expected unit selling price is: $125 Expected unit variable cost is: $70 Expected total fixed costs are: $1,512,500 1. Calculate breakeven point in both units and dollars. (Show work in blank space below.) Round units to the nearest unit and round dollars to the nearest dollar. 2. Compute sales units required to realize income from operations of $630,000. 3. Construct a cost-volume-profit chart assuming maximum sales in the relevant...
Birch Company normally produces and sells 41,000 units of RG-6 each month. The selling price is...
Birch Company normally produces and sells 41,000 units of RG-6 each month. The selling price is $20 per unit, variable costs are $10 per unit, fixed manufacturing overhead costs total $185,000 per month, and fixed selling costs total $42,000 per month. Employment-contract strikes in the companies that purchase the bulk of the RG-6 units have caused Birch Company’s sales to temporarily drop to only 11,000 units per month. Birch Company estimates that the strikes will last for two months, after...
[The following information applies to the questions displayed below.] Henna Co. produces and sells two products,...
[The following information applies to the questions displayed below.] Henna Co. produces and sells two products, T and O. It manufactures these products in separate factories and markets them through different channels. They have no shared costs. This year, the company sold 43,000 units of each product. Sales and costs for each product follow. Product T Product O Sales $ 761,100 $ 761,100 Variable costs 608,880 76,110 Contribution margin 152,220 684,990 Fixed costs 33,220 565,990 Income before taxes 119,000 119,000...
Indigo Company sells televisions at an average price of $990 and also offers to each customer...
Indigo Company sells televisions at an average price of $990 and also offers to each customer a separate 3-year warranty contract for $93 that requires the company to perform periodic services and to replace defective parts. During 2020, the company sold 327 televisions and 227 warranty contracts for cash. It estimates the 3-year warranty costs as $21 for parts and $41 for labor, and accounts for warranties separately. Assume sales occurred on December 31, 2020, and straight-line recognition of warranty...
#1 Action Company, sells mood lights for $60 each. In 2018 Action anticipates selling 15,000 lights....
#1 Action Company, sells mood lights for $60 each. In 2018 Action anticipates selling 15,000 lights. The company has the following costs and inventory levels per light for the year: Direct materials $16 Direct manufacturing labor $18 Manufacturing overhead $10 Beginning inventory Ending inventory Direct materials 200 units 300 units Work-in-process inventory          0 units 0 units Finished goods inventory             2,100 units 1,500 units Calculate the following for Action in 2018. A) Budgeted income statement sales. B) Number of mood lights...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT