Prepare journal entries for sales revenue

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Question: During 20X0, the Ashley Appliance Company had cash sales of $800,000. The company estimates that the cost of servicing products under warranty will average 3% of sales.

1. Prepare journal entries for sales revenue and the related warranty expense for 20X0. Assume all sales are for cash.

2. The liability for warranties was $12,000 at the beginning of 20X0. Expenditures (all in cash) to satisfy warranty claims during 20X0 were $21,400, of which $4,000 was for products sold in 20X0. Prepare the journal entry for the warranty expenditures.

3. Compute the balance in the Liability for Warranties account at the end of 20X0

Reference no: EM131888401

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