- Warranties Clean Corporation Manufactures And Sells Dishwashers Clean Provides All Customers With A Two Year Warranty G 1 (140.76 KiB) Viewed 46 times
Clean Corporation manufactures and sells dishwashers. Clean provides all customers with a two-year warranty guaranteeing to repair, free of charge, any defects reported during this time period. During the year, it sold 100,000 dishwashers for $325 each. Analysis of past warranty records indicates that 12% of all sales will be returned for repair within the warranty period. Clean expects to incur expenditures of $14 to repair each dishwasher. The account Estimated Liability for Warranties had a balance of $120,000 on January 1. Clean incurred $150,000 in actual expenditures during the year.
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Prepare all journal entries necessary to record the events related to the warranty transactions during the year.
During the year, it sold 100,000 dishwashers for $325 each.
How does this entry affect the accounting equation? Indicate the effect on financial statement items by selecting "–" for decrease (or negative effect), "+" for increase (or positive effect) and "NE" for No Entry (or no effect) on the financial statement.
Warranties Clean Corporation manufactures and sells dishwashers. Clean provides all customers with a two-year warranty guaranteeing to repair, free of charge, any defects reported during this time period. During the year, it sold 100,000 dishwashers for $325 each. Analysis of past warranty records indicates that 12% of all sales will be returned for repair within the warranty period. Clean expects to incur expenditures of $14 to repair each dishwasher. The account Estimated Liability for Warranties had a balance of $120,000 on January 1. Clean incurred $150,000 in actual expenditures during the year. Required: Prepare all journal entries necessary to record the events related to the warranty transactions during the year. During the year, it sold 100,000 dishwashers for $325 each. How does this entry affect the accounting equation? Indicate the effect on financial statement items by selecting "-" for decrease (or negative effect), "+" for increase (or positive effect) and "NE" for No Entry (or no effect) on the financial statement. Description Journal Description Debit Journal Credit Debit Assets Credit = Assets Balance Sheet Liabilities + Analysis of past warranty records indicates that 12% of all sales will be returned for repair within the warranty period. Clean expects to incur expenditures of $14 to repair each dishwasher. The account Estimated Liability for Warranties had a balance of $120,000 on January 1. How does this entry affect the accounting equation? Indicate the effect on financial statement items by selecting "-" for decrease (or negative effect), "+" for increase (or positive effect) and "NE" for No Entry (or no effect) on the financial statement. Balance Sheet Stockholders' Equity Liabilities + Revenues Stockholders' Equity Income Statement Revenues Expenses = Income Statement Net Income Expenses Net Income
Clean incurred $150,000 in actual expenditures during the year. How does this entry affect the accounting equation? Indicate the effect on financial statement items by selecting "-" for decrease (or negative effect), "+" for increase (or positive effect) and "NE" for No Entry (or no effect) on the financial statement. Description $ Journal Debit Credit Assets = Balance Sheet Stockholders' Liabilities + Equity Determine the adjusted ending balance in the Estimated Liability for Warranties account. Revenues Income Statement Expenses = Net Income