E11-5-6-7-8 C-Wyckoff.docx

E11-5-6-7-8 C-Wyckoff.docx - Exercises E11-5 thru E11-8...

Info icon This preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
Exercises E11-5 thru E11-8 10/18/2017 Charles Wyckof E11-5 Betancourt Company sells automatic can openers under a 75-day warranty for defective merchandise. Based on past experience, Betancourt estimates that 3% of the units sold will become defective during the warranty period. Management estimates that the average cost of replacing or repairing a defective unit is $15. The units sold and units defective that occurred during the last 2 months of 2017 are as follows. Instructions (a) Prepare the journal entries to record the estimated liability for warranties and the costs incurred in honoring 1,000 warranty claims. (Assume actual costs of $15,000.) (b) Determine the estimated warranty liability at December 31 for the units sold in November and December. (c) Give the entry to record the honoring of 500 warranty contracts in January at an average cost of $15. (a) Warranty Exp. $27,900 Warranty Liability $27,900 Warranty Liability 15,000 Repair Parts 15,000 (Nov 30,000 x 3% = 900, Dec 32,000 x 3% = 960, 1,860 est.) ($15,000/ 1,000 = $15 est. cost per unit) ($15 x 1,860 = 27,900)
Image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern