Qulz Help Save Exit Submilt Hitzu Co sold a copler costing 7

Qulz Help Save& Exit Submilt Hitzu Co. sold a copler costing $7,500 with a two-year parts warranty to a customer on August 16, 2017, for $15,000 cash. Hitzu uses the perpetual inventory system. On November 22, 2018, the copler requires on-site repairs that are completed the same day. The repairs cost $148 for materials taken from the repair parts inventory. These are the only repairs required in 2018 for this copier. Based on experience zu expects to Incur warranty costs equal to 3% of dollar sales t records warranty expense th an adjusting entry at the end of each year. 1. How much warranty expense does the company report in 2017 for this copier? 2-33 ed 2. How much is the estimated warranty liability for this copier as of December 31, 2017? 3. How much warranty expense does the company report in 2018 for this copier?

Solution

1) Warranty expense 450 (15,000*3%) 2) Estimated warranty liability 450 3) Warranty expense 0 4) Estimated warranty liability 302 (450-148) 5) Date    General Journal Debit Credit Aug16,2015 Cash 15,000 sales 15,000 Aug16,2015 Cost of goods sold 7,500 Merchandise inventory 7,500 Dec31,2015 Warranty expense 450 Estimated warranty liability 450 nov 22,2016 Estimated warranty liability 148 Repair parts inventory 148