Question

CH13 - Assign 1 (algorithmic-required) Woodmier Lawn Products introduced a new line of commercial sprinklers in 2017 that carry a one year warranty against manufacturer's defects. Because this was the first product for which the company offered a warranty, trade publications were consulted to determine the experience of others in the industry Based on that experience, warranty costs were expected to approximate 1% of sales. Sales of the sprinklers in 2017 were $4.5 million. Accordingly, the following entries relating to the contingency for warranty costs were recorded during the first year of selling the product Debit Credit points General Journal Accrued liability and expense Warranty expense (1% x $4,500,000) Estimated warranty liability Skipped 45,000 45,000 Actual expenditures (summary entry) Estimated warranty liability Cash, wages payable, parts and supplies, etc. 28,000 28.000 References In late 2018, the company's claims experience was evaluated and it was determined that claims were for more than expected-2% of sales rather than 1% Required: 1. Assuming sales of the sprinklers in 2018 were $56 million and warranty expenditures in 2018 totaled $108,000, prepare any journal entries related to the warranty 2. Assuming sales of the sprinklers were discontinued after 2017 prepare any journal entrys) in 2018 related to the warranty Complete this question by entering your answers in the tabs below. Required 1 Required 2 Assuming sales of the sprinkers were discontinued after 2017, prepare any journal entry(s) in 2018 related to the warranty. (If no entry is required for a transaction/event, select "No journal entry required in the first account field. Enter your answers in whole dollars.) View transaction list

Answer 1

Debit Credit Requirement 1: Date Description Warranty expense ( $5,600,000 2%) Estimated warranty liability $112,000 $112,000 $108,000 Estimated warranty liability Cash, wages, payable, parts and supplies etc. $108,000 Debit Credit Requirement 2: Date Description Estimated warranty liability ($45,000 - $28,000) Loss on product warranty ( $4,500,000 X (2% -1%)] $17,000 $45,000 Cash, wages, payable, parts and supplies etc. [( $4,500,000 x 2% ) - $28,000 ] $62,000