Answer: Please refer to Explanation
Explanation:
It is stated that the company expects warranty costs to equal 8% of dollar sales and that the cost of 1 razor is $15 to make.
Nov 11
DR Cash $4,900
CR Sales $4,900
(To record Sale of Razors)
Nov 11
DR Cost of goods sold (70*15) $1,050
CR Merchandise inventory $1,050
(To record Cost of Goods Sold)
Nov 30
DR Warranty expense (4,900 * 8%) $392
CR Estimated warranty liability $392
(To record Warranty Expense)
Dec 9
DR Estimated warranty liability (14 *$15) $210
CR Merchandise inventory $210
(To Record Warranty Liability)
Dec 16
DR Cash $14,700
CR Sales $14,700
(To record sale of Razors)
Dec 16
DR Cost of goods sold (210 * 15) $3,150
CR Merchandise inventory $3,150
( To record Cost of Goods sold)
Dec 29
DR Estimated warranty liability (28*15) $420
Merchandise inventory $420
( To record Warranty Liability)
Dec 31
DR Warranty expense (14,700*8%) $1,176
CR Estimated warranty liability $1,176
(To record Warranty Expense)
Year 2
Jan 5
DR Cash $9,800
CR Sales $9,800
(To record sale of Razors)
Jan 5
DR Cost of goods sold (140 *15) $2,100
CR Merchandise inventory $2,100
(To record Cost of Goods sold)
Jan 17
DR Estimated warranty liability (33*15) $495
CR Merchandise inventory $495
(To record Warranty Liability)
Jan 31
DR Warranty expense (9,800 * 8%) $784
CR Estimated warranty liability $784
(To record Warranty Expense)
