*Please be sure to do the final journal entry. Please.* Hitzu Co. sold a copier
ID: 2514808 • Letter: #
Question
*Please be sure to do the final journal entry. Please.*
Hitzu Co. sold a copier costing S6,500 with a two-year parts warranty to a customer on August 16, 2016, for $13,000 cash. Hitzu uses the perpetual inventory system. On November 22, 2017, the copier requires on-site repairs that are completed the same day. The repairs cost $127 for materials taken from the Repair Parts Inventory. These are the only repairs required in 2017 for this copier. Based on experience, Hitzu expects to incur warranty costs equal to 3% of dollar sales. It records warranty expense with an adjusting entry at the end of each year 1. How much warranty expense does the company report in 2016 for this copier? 2. How much is the estimated warranty liability for this copier as of December 31, 2016? liabilit 3. How much warranty expense does the company report in 2017 for this copier?Explanation / Answer
1 Warranty expense =13000*3%= $390 2 Estimated warranty liability =$390 3 Warranty expense =$0 4 Estimated warranty liability =390-127= $263 5 Date General Journal Debit Credit Aug. 16, 2015 Cash 13,000 Sales 13,000 Aug. 16, 2015 Cost of goods sold 6,500 Merchandise inventory 6,500 31-Dec-15 Warranty expense 390 Estimated warranty liability 390 Nov. 22, 2016 Estimated warranty liability 127 Repair parts inventory 127
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