On November 10 2017 Singh Electronics began to buy and resel

On November 10, 2017, Singh Electronics began to buy and resell scanners for $47 each. Singh uses the perpetual system to account for inventories. The scanners are covered under a warranty that requires the company to replace any non-working scanner within 90 days. When a scanner is returned, the company simply throws it away and mails a new one from inventory to the customer. The company’s cost for a new scanner is only $27. Singh estimates warranty costs based on 15% of the number of units sold. The following transactions occurred in 2017 and 2018 (ignore GST and PST):

Required:
1. How much warranty expense should be reported for November and December 2017?

2. How much warranty expense should be reported for January 2018? (Round your intermediate calculations and final answer to the nearest whole number.)

3. What is the balance of the estimated warranty liability as of December 31, 2017?

4. What is the balance of the estimated warranty liability as of January 31, 2018?

5. Prepare journal entries to record ALL transactions and year-end adjustments (ignore sales taxes).

1.Record the sale of scanners to customers.

2.Record the cost of the November 15 sale.

3.Record the scanner warranty expense and liability at 15% of the units sold.

4.Record the cost of scanner warranty replacements.

5.Record the sale of scanners to customers.

6.Record the cost of the December 15 sale.

7.Record the cost of scanners warranty replacements.

8.Record the scanner warranty expense and liability at 15% of the units sold.

9.Record the sale of scanners to customers.

10.Record the cost of the January 14 sale.

11.Record the cost of scanner warranty replacements.

12.Record the scanner warranty expense and liability at 15% of the units sold.

	2017
Nov.	15	Sold 4,000 scanners for $188,000 cash.
	30	Recognized warranty expense for November with an adjusting entry.
Dec.	8	Replaced 280 scanners that were returned under the warranty.
	15	Sold 6,800 scanners.
	29	Replaced 66 scanners that were returned under the warranty.
	31	Recognized warranty expense for December with an adjusting entry.
	2018
Jan.	14	Sold 340 scanners.
	20	Replaced 88 scanners that were returned under the warranty.
	31	Recognized warranty expense for January with an adjusting entry.

Solution

ans 1 Warranty Expense November (188000*15%) 28200 December (6800*47*15%) 47940 Total ans 2warranty expense should be reported for January 2018 2397 (340*47*15%) 3. estimated warranty liability as of December 31, 2017 Warranty expense for November A 28200 Warranty expense for December B 47940 Cost of replacing items in December (280+66)*27 C 9342 Liability balance A+B-C 66798 4. estimated warranty liability as of January 31, 2018? Beginning balance 66798 Warranty expense for January 2397 Cost of replacing items in January (88*27) -2376 Liability balance 66819 Date Accounts Title Dr Cr 15-Nov Cash $188,000 Sales $188,000 Cost of Good sold (4000*27) $108,000 Mercandise Inventory $108,000 30-Nov Warranty expenses $28,200 Estimated warranty liability $28,200 8-Dec Estimated warranty liability (280*27) $7,560 Mercandise Inventory $7,560 15-Dec Cash $319,600 Sales $319,600 Cost of Good sold (6800*27) $183,600 Mercandise Inventory $183,600 29-Dec Estimated warranty liability 1782 Mercandise Inventory (66*27) 1782 31-Dec Warranty expenses $47,940 Estimated warranty liability $47,940 14-Jan Cash (340*47) $15,980 Sales $15,980 Cost of Good sold (340*27) $9,180 Mercandise Inventory $9,180 20-Jan Estimated warranty liability 2376 Mercandise Inventory (88*27) 2376 31-Jan Warranty expenses $2,397 Estimated warranty liability $2,397