Answer and Explanation:
1.1 The Journal Entry is shown below:-
a. Cash Dr, $5,400
To Sales $5,400
(Being Sales Held is recorded)
b. Warranty Expense Dr, $330
Estimated Warranty Liability $330
(Being warranty expense recognized is recorded)
($5,500 × 6%)
c. Estimated Warranty Liability Dr, $435
To Inventory $435
(Being warranty Executed is recorded)
(29 razors × $15)
d. Cash Dr, $16,200
To Sales $16,200
(Being Sales Held is recorded)
e. Estimated Warranty Liability Dr, $360
To Inventory $360
(Being Warranty Executed is recorded)
(24 × $15)
f. Warranty Expense Dr, $972
To Estimated Warranty Liability $972
(Being warranty expense recognized is recorded)
($16,200 × 6%)
2. The computation of warranty expense is reported for November 2016 and December 2016 is shown below:-
Warranty Expense for Nov 2016 = $5,500 × 6%
= $330
Warranty Expense for Dec 2016 = $16,200 × 6%
= $972
3. The computation of warranty expense is reported for January 2017 is given below:-
Warranty Expense for Jan 2017 =$10,800 × 6%
= $648
4. The computation of balance of the Estimated Warranty Liability account as of December 31, 2016 is given below:-
Balance of Estimated Warranty Liability on 31 Dec 2016 = Estimated Warranty Liability For Nov 2016 + Estimated Warranty Liability For Dec 2016 - Warranty Claim in Dec 2016
= $330 + $972 - $648
= $654
5. The computation of balance of the Estimated Warranty Liability account as of December 31, 2017 is given below:-
Balance of Estimated Warranty Liability on 31st Jan 2017 = Balance of Estimated Warranty Liability on 31 Dec 2016 + Estimated Warranty Liability for Jan 2017 - Warranty Claim in Jan 2017
= $654 + $648 - (29 × $15)
= $654 + $648 - $435
= $867
