13 Homework Question 1 of 6 1000 points Woodmier Lawn Produc

·13 Homework Question 1 (of 6) 10.00 points Woodmier Lawn Products introduced a new line of commercial sprinklers in 2015 that carry a one-year warranty against manufacturer\'s defects. Because this was the first product for which the company offered a warranty, trade publications were consulted to determine the experience of others in the industry. Based on that experence, warranty costs were expected to approximate 1% of sales. Sales of the sprinklers in 2015 were $4.3 million. Accordingly. the following entries relating to the contingency for waranty costs were recorded duning the first year of selling the product General Jounal Debit Credit Accrued kability and expense Waranty expense (1% $4,300,000) 43,000 Estimated warranty bability 43.000 Actual expenditures (summary entry) Estimated warranty liability 24,000 Cash, wages payable, parts and supplies, etc far more than expected-2% of sales rather than 1% Required 24,000 In late 2016, the company\'s claims experience was evaluated and it was determined that claims were 1. Assuming sales of the spinklers in 2016 were $5 4 million and warranty expenditures in 2016 totaled $106,000, prepare any joumal entries related to the warranty (If no entry is required for a transaction/event, select \"No journal entry required\" in the first account field. Enter your answers in whole dollars.) iew transaction list Journal entry worksheet Record the accrued liability and expense Note: Enter debits before credits

Solution

Journal entries:

To cash,wages payable,parts and supplies, etc

[(2% * 4300000 in 2015) - 24000]

	Accounts title	Dr.	Cr.
1.	Warranty expense [2% * 5400000 sales]	108000
	To Estimated warranty liability		108000
	Estimated warranty liability	106000
	To cash,wages payable,parts and supplies, etc		106000
2.	Estimated warranty liability [43000 - 24000]	19000
	loss on product Warranty [(2%-1%) * 4300000 in 2015]	43000
	To cash,wages payable,parts and supplies, etc [(2% * 4300000 in 2015) - 24000]		62000