Prepare the journal entries to record

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Reference no: EM1313406

Preparation of journal entries to record the estimated warranty and actual costs incureed.

Presley Company sells a product that includes a one-year warranty on parts and labor. During the year, 10,000 units are sold. Presley expects that 3% of the units will be defective and that the average warranty cost will be $50 per unit. Actual warranty costs incurred during the year were $14,000.

Instructions

Prepare the journal entries to record (a) the estimated warranty costs and (b) the actual costs incurred.

Reference no: EM1313406

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