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Prepare adjusting entry to accrue estimated warranty cost

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Question: On December 1, Swifty Company introduces a new product that includes a one-year warranty on parts. In December, 1,100 units are sold. Management believes that 4% 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.)

Reference no: EM132714677

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