Prepare journal entries to record the repairs

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Problem - Sam Punji sells video cassette recorders (VCRs) with a 2-year warranty. Past experience indicates that 3% of the units sold will be returned during the warranty period for repairs. The average cost of repairs under warranty is estimated to be $50 per unit. During 2002, 7,000 VCRs were sold at an average price of $250. During the year, repairs were made on 35 units at a cost of $3,000. Prepare journal entries to record the repairs made under warranty and estimated warranty expense for the year.

Reference no: EM132701942

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