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Prepare journal entries required to create warranty period

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Reference no: EM131573002

PROBLEM - Spoiled Baby Corp (SPC) sells baby buggies. Recent changes in the law required SPC to warranty its products for 90 days and you must set up the required accounts. Historical Data indicates that 6% of monthly sales result in warranty claims. The June 20x1 monthly sales are $481,000.

The following warranty claims were made against June sales.

July 8              210              July 14                450

July 16            900              July 21                385

July 26            421              July 28                772

Aug 4              1,795           Aug 8                  921

Aug 14            267              Aug 17                1,022          

Aug 25            186              Aug 27                755

Aug 29            548              Aug 30                899

Sept 2             111              Sept 3                219

Sept 5             1,135           Sept 14              816

Sept 18           242              Sept 24              987

Sept 27           147              Sept 28              1,587

Sept 29           788              Sept 30              489

Oct 1              1188             Oct 8                 1387

Oct 14            489               Oct 17               577

Oct 21            1,967            Oct 27               927

Oct 28            683               Oct 29               492

Oct 30            897               Oct 31               1572

Prepare the Journal entries required to create and close the warranty period.

Reference no: EM131573002

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