50.1K

Verified Solution

Link Copied!

Cullumber Company sells remote control airplane engines, which carry a one-year warranty. If a customer brings in a defective engine, he replaces the engine with a new one from his inventory. Cullumber estimates that 2% of sales are defective. As of January 1, the Warranty Liability had a credit balance of $400. Cullumber provided the following sales and warranty cost information for his year end of December 31.

Sales price per engine $135

Total sales 1,150 units

Actual warranty costs $1,115.

Calculate the estimated warranty expense for the year.

Estimated warranty expense? $

Prepare the journal entry for the estimated warranty expense for the year. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter o for the amounts.) Date Account Titles and Explanation Debit Credit Dec. 31 Prepare the journal entry to record the actual warranty costs for the year. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter o for the amounts.) Date Account Titles and Explanation Debit Credit Dec. 31 Calculate the ending balance in the warranty liability account at the end of the year. Ending balance in warranty liability account If Cullumber fixed an engine himself instead of replacing it with a new engine, what account would be credited instead of Repair Parts Inventory? If Cullumberfixed an engine himself instead of replacing it with a new engine, the account would be credited instead of the Inventory account

Answer & Explanation Solved by verified expert

See Answer