Prepare a journal entry to record the estimated liability

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Reference no: EM13914742

Boulware Company manufactures and sells electronic games. Each game costs $25 to produce, sells for $45, and carries a warranty that provides for free replacement if it fails during the two years following the sale. In the past, 7 percent of the games sold had to be replaced under the warranty. During July, Boulware sold 13,000 games, and 1,400 games were replaced under the warranty.

1. Prepare a journal entry to record the estimated liability for product warranties during the month.

2. Prepare a journal entry to record the games replaced under warranty during the month.

Reference no: EM13914742

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