Answer Happy

3 tof astion 93-(10 Marks: 01-10): Asian Company sells automatic can openers under a 95-day warranty for defective merchandise. Based on past experience, Asian estimates that 6% of the units sold will become defective during the warranty period. Management estimates that the average cost of replacing or repairing a defective unit is BD19. The units sold and units defective that occurred during the last 3 months of 2021 are as follows. Units Defective Month Units Sold Prior to December 31 October 42,000 900 November 44,000 700 December 46,000 500 Required: Based on the above data use your basic skills to, (a) Prepare the journal entries to record the estimated liability for warranties and the costs incurred in honoring 1,900 warranty claims. (Assume actual costs of BD36,100.) (4M) (b) Determine the estimated warranty liability at December 31 for the units sold in October, November and December (4M) (c) Give the entry to record the honoring of 900 warranty contracts in January at an average cost of BD19. (2M)