Question

Exercise 9-10 Warranty expense and liability computations and entries LO P4 Hitzu Co. sold a copier costing $4,800 with a two-year parts warranty to a customer on August 16, 2017, for $6,000 cash. Hitzu uses the perpetual inventory system. On November 22, 2018, the copier requires on-site repairs that are completed the same day. The repairs cost $209 for materials taken from the repair parts inventory. These are the only repairs required in 2018 for this copier. Based on experience, Hitzu expects to incur warranty costs equal to 4% of dollar sales. It records warranty expense with an adjusting entry at the end of each year. How much warranty expense does the company report in 2017 for this copier?

Answer 1

Answer:

the warranty expense does the company report for the year 2017 is  $240

Explanation:

The computation of the warranty expense does the company report for the year 2017 is shown below:

= Dollar sales × given percentage

= $6,000 × 4%

= $240

Hence, the warranty expense does the company report for the year 2017 is  $240

We simply applied the above formula so that the correct value could come

And, the same is to be considered