Prepare an adjusting entry on december

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Q1: A coal company invests $11900000 in a mine estimated to have 19600000 tonnes of coal and no residual value. It is expected that the mine will be in operation for 5 years. In the first year, 1070000 tonnes of coal are extracted and sold. What is the depreciation included in cost of goods sold for the first year?

Q2: In 2021, Sheridan Company introduces a new product that includes a two-year warranty on parts. During 2021, 5,000 units are sold for $465 each. The cost of each unit was $210. The company estimates that 9% of the units will be defective and that the average warranty cost will be $90 per unit. The company has a December 31 fiscal year-end and prepares adjusting entries on an annual basis. Prepare an adjusting entry on December 31, 2021, to accrue the estimated warranty cost.

Reference no: EM132988839

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