Ex. 191Old Hampton Company is preparing adjusting entries at December 31. An analysis reveals thefollowing1. During December, Old Hampton Company sold 3,000 units of a product that carries a 60-daywarranty. The sales for this product totaled $100,000. The company expects 4% of the unitsto need repair under the warranty and it estimates that the average repair cost per unit will be$15.2. The company has been sued by a disgruntled employee. Legal counsel believes that it isreasonably possible that the company will have to pay $200,000 in damages.3. The company has been named as one of several defendants in a $400,000 damage suit.Legal counsel believes it is unlikely that the company will have to pay any damages.-4. Employees earn vacation pay at a rate of 1 day per month. During December, ten employeesqualify for vacation pay. Their average daily wage is $90 per employee.InstructionsPrepare adjusting entries, if required, for each of the four items.

Journal Entry - It is record of business transactions in day to day life over a particular period of…

Answered: Ex. 191 Old Hampton Company is…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

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Bramble Company sells automatic can openers under a 75-day warranty for defective merchandise. Based on past experience, Bramble estimates that 3% 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 $20. The units sold and units defective that occurred during the last 2 months of 2022 are as follows. Month Units Sold Units Defective Prior to December 31 November 32,000 640 December 34,000 425 (a) Prepare the journal entry to record the costs incurred in honoring 1,065 warranty claims. (Assume actual costs of $21,300.) (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Account Titles and Explanation Debit Credit
Old Hampton Company is preparing adjusting entries at December 31. An analysis reveals the following: 1. During December, Old Hampton Company sold 3000 units of a product that carries a 60-day warranty. The sales for this product totaled $100,000. The company expects 4% of the units to need repair under the warranty and it estimates that the average repair cost per unit will be 15$. 2. The company has been sued by a disgruntled employee. Legal counsel believes that it is reasonably possible that the company will have to pay $200,000 in damages. 3. The company has been named as one of several defendants in a $400,000 damage suit. Legal counsel believes it is unlikely that the company will have to pay any damages. 4. Employees earn vacation pay rate at 1 day per month. During December, ten employees qualify to vacation pay. Their average daily wage is $90 per employee. Instructions Prepare adjusting entries, if required for each of the four items.
Bramble Company sells automatic can openers under a 75-day warranty for defective merchandise. Based on past experience, Bramble estimates that 3% 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 $20. The units sold and units defective that occurred during the last 2 months of 2022 are as follows. Month Units Sold Units Defective Prior to December 31 November 32,000 640 December 34,000 425 (a) Your Answer Correct Answer Your answer is partially correct. Prepare the journal entry to record the costs incurred in honoring 1,065 warranty claims. (Assume actual costs of $21,300.) (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Account Titles and Explanation Debit Credit Warranty Expense 21,300 Notes Payable 21,300
On December 1, Waterway Company introduces a new product that includes a one-year warranty on parts. In December, 3,400 units are sold. Management believes that 5% of the units will be defective and that the average warranty costs will be $85 per unit. Prepare the adjusting entry at December 31 to accrue the estimated warranty cost, assuming no warranty claims have been honored to date. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Date Account Titles and Explanation Debit Credit Dec. 31
Coronado Company sells automatic can openers under a 75-day warranty for defective merchandise. Based on past experience, Coronado estimates that 3% 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 $25. The units sold and units defective that occurred during the last 2 months of 2022 are as follows. Month November December (a) Units Sold 31,600 33,600 Units Defective Prior to December 31 632 Account Titles and Explanation 420 Prepare the journal entry to record the costs incurred in honoring 1,052 warranty claims. (Assume actual costs of $26,300.) (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Debit Credit
On December 1, Concord Company introduces a new product that includes a one-year warranty on parts. In December, 1,300 units are sold. Management believes that 6% of the units will be defective and that the average warranty costs will be $90 per unit. Prepare the adjusting entry at December 31 to accrue the estimated warranty cost, assuming no warranty claims have been honored to date. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Date Account Titles and Explanation Debit Credit Dec. 31
BE11-6 On December 1, Bruney Company introduces a new product that includes a one- year warranty on parts. In December, 1,000 units are sold. Management believes that 5% of the units will be defective and that the average warranty costs will be $90 per unit. Prepare the adjusting entry at December 31 to accrue the estimated warranty cost. Prepare adjusting entry for warranty costs. (LO 2)
On December 1, Sheridan Company introduces a new product that includes a one-year warranty on parts. In December, 1,400 units are sold. Management believes that 5% of the units will be defective and that the average warranty costs will be $90 per unit.Prepare the adjusting entry at December 31 to accrue the estimated warranty cost, assuming no warranty claims have been honored to date. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)
Wally Co. began selling merchandise on November 1, 2022. The company offers a 50-day warranty for defective merchandise. Based on prior experience with similar merchandise, Wally Co. predicts that 2.80% of the units sold will encounter a fault within the warranty period, with a replacement or repair of a damaged unit costing an average of $30. In November, Wally Co. sold 25,000 units and 400 defective units were returned. In December, Wally Co. sold 32,000 units and 544 defective units were returned. The actual cost of replacing the defective units was $38,500. Prepare a journal entry to accrue for the estimated warranty costs for the November and December sales at December 31, 2022. Prepare one summary journal entry at December 31, 2022, to record the cost of replacing the defective merchandise returned during November and December. What amounts will be included in Wally Co.’s 2022 income statement and balance sheet at December 31, 2022, with regard to the warranty? Show steps…
Ecco Company sold $150,000 of kitchen appliances with six-month warranties during September. The cost to repair defects under the warranty is estimated at 7% of the sales price. On October 15, a customer required a $200 part replacement, plus $84 labor under the warranty. a. Journalize the entry for the estimated expense on September 30. If an amount box does not require an entry, leave it blank. fill in the blank 068e4ff7d019fb4_2 fill in the blank 068e4ff7d019fb4_3 fill in the blank 068e4ff7d019fb4_5 fill in the blank 068e4ff7d019fb4_6 b. Journalize the entry for the October 15 warranty work. If an amount box does not require an entry, leave it blank.
Sea Port Company sells a product that carries a 60-day unconditional warranty against product failure. Based on statistical analysis, Sea Port knows that between the time of sale and the lapse of the warranty, 4% of the units sold will fail and require repair at an avenge cost of $40 per unit. The following data reflect the first three months during which the product was sold. October November December Units sold 30,000 36,000 60,000 Known units of product failure From sales of October 480 600 120 November 300 960 December 900 Prepare the general journal entry to record Sea Port’s estimated liability for product warranties at December 31. Assume that warranty costs of known failures have already been reflected in the records.
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