Prepare the journal entry to record wands replaced

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Ollivander's Inc. sells wands and offers a lifetime replacement warranty on all units sold, meaning any defective wants are replaced with a new one. The company's past experience shows that 3% of wands sold will be replaced under warranty. In 2020, Ollivander's Inc. sold 4,300 wands at a price of $185 each. Each wand costs Ollivander's $105 to produce. In 2020, 45 wands were replaced under warranty.

Required:

Problem 1. Prepare the journal entry to record the warranty expense for 2020 (use Dec 31, 2020 as a date)

Problem 2. Prepare the journal entry to record wands replaced under warranty for 2020 (use Dec 31, 2020)

Reference no: EM132968740

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