During 2017, Cougar Manufacturing launched a new product carrying a two-year war

Question

During 2017, Cougar Manufacturing launched a new product carrying a two-year warranty against defects. The estimated warranty costs related to dollar sales are 3% within 12 months following sale and 5% in the second 12 months following sale. Sales and actual warranty claims for the years ended December 31, 2017 and 2018 were as follows:

                                                            Actual

                                                            Warranty

                                                            Sales                           Claims

                      2017                              $400,000                     $19,000

                      2018                              500,000                       32,000

                                                            $900,000                     $51,000

Prepare the journal entry at December 31, 2017 for the accrual of warranty expenses.

Date

Account /Explanation

Debit

Credit

Prepare the journal entry at December 31, 2018 for the accrual of warranty expenses.

Date

Account /Explanation

Debit

Credit

Date

Account /Explanation

Debit

Credit

Explanation / Answer

12/31/17 Warranty expense 32000 =400000*8%         Estimate warranty payable 32000 12/31/18 Warranty expense 40000 =500000*8%         Estimate warranty payable 40000

Related Questions

Navigate

• Browse (All)
• Browse D
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.