Answer:
1. $240
2. $240
3. $0
4. $31
5. August 16, 2016
Dr Cash $6,000
Cr Sales $6,000
Aug. 16, 2016
Dr Cost of goods sold $4,800
Cr Merchandise inventory $4,800
Dec 31,2016
Dr Warranty expense $240
Cr Estimated warranty liability $240
Nov. 22, 2017
Dr Estimated warranty liability $209
Cr Repair parts inventory $209
Explanation:
1. Calculation to determine How much warranty expense does the company report in 2016 for this copier
Warranty expense = 4% × $6,000
Warranty expense= $240
Therefore the amount of warranty expense that the company report in 2016 for this copier is $240
2. Calculation to determine How much is the estimated warranty liability for this copier as of December 31, 2016
Estimated warranty liability= 6% × $6,000
Estimated warranty liability= $240
Therefore estimated warranty liability for this copier as of December 31, 2016 is $240
3. The 2017 warranty expense that the company report in 2017 for this copier will be $0 because NO ADDITIONAL WARRANTY EXPENSE in the year 2017 should be reported for this copier
4. Calculation to determine how much is the estimated warranty liability for this copier as of December 31, 2017
2017 ESTIMATED WARRANTY LIABILITY
Beginning 2017 balance $240
(4%*$6,000)
Less Parts cost ($209)
Ending 2017 balance $31
Thereforea m the estimated warranty liability for this copier as of December 31, 2017 is $31
5. Preparation of the journal entries
August 16, 2016
Dr Cash $6,000
Cr Sales $6,000
Aug. 16, 2016
Dr Cost of goods sold $4,800
Cr Merchandise inventory $4,800
Dec 31,2016
Dr Warranty expense $240
Cr Estimated warranty liability $240
Nov. 22, 2017
Dr Estimated warranty liability $209
Cr Repair parts inventory $209
