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Prepare the journal entry to record the costs incurred

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Question - Swifty Company sells automatic can openers under a 75-day warranty for defective merchandise. Based on past experience, Swifty estimates that 4% of the units sold will become defective during the warranty period. Management estimates that the average cost of replacing or repairing a defective unit is $25. The units sold and units defective that occurred during the last 2 months of 2020 are as follows.

Month Units SoldUnits Defective Prior to December 31

November 36,000 720

December 38,000 475

Prepare the journal entry to record the costs incurred in honoring 1,195 warranty claims.

Reference no: EM132727145

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