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On December 1, 2015 Raff Company introduces a new product that includes a one-year warranty on parts. In December, 2,000 units were sold. Management believes that 10% of the units will be defective and that the average warranty costs will be $100 per unit.
Instruction:
Question 1- Prepare the adjusting entry at December 31 to accrue the estimated warranty cost.
Question 2- In 2015 warranty contract honored in 50 units, prepare the journal entry.
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