During December, Vixen Company sells $869,000 in merchandise that has a one-year warranty. Warranty expense is estimated at 3% of sales. On January 5 of the following year, the merchandise requires repairs that are completed the same day. The repairs cost $15,900 for materials taken from parts inventory. The entry to record the repairs that occur on January 5 is: O Debit Estimated Warranty Liability $10,170; credit Parts Inventory $10,170. O Debit Estimated Warranty Liability $26,070; credit Warranty Expense $26,070. Debit Warranty Expense $15,900; credit Estimated Warranty Liability $15,900. O Debit Estimated Warranty Liability $15,900; credit Parts Inventory $15,900. Debit Warranty Expense $10,170; credit Estimated Warranty Liability $10,170.

During December, Vixen Company sells $869,000 in merchandise that has a one-year warranty. Warranty expense is estimated at 3% of sales. On January 5 of the following year, the merchandise requires repairs that are completed the same day. The repairs cost $15,900 for materials taken from parts inventory. The entry to record the repairs that occur on January 5 is: O Debit Estimated Warranty Liability $10,170; credit Parts Inventory $10,170. O Debit Estimated Warranty Liability $26,070; credit Warranty Expense $26,070. Debit Warranty Expense $15,900; credit Estimated Warranty Liability $15,900. O Debit Estimated Warranty Liability $15,900; credit Parts Inventory $15,900. Debit Warranty Expense $10,170; credit Estimated Warranty Liability $10,170.

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter9: Current Liabilities And Contingent Obligations

Section: Chapter Questions

Problem 10RE

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