Prepare the necessary journal entries to record the issue

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a. Purple Corporation started its business in 2020 and sold electronics worth $185,000 in 2020. The company provided a 2- year limited warranty for all sales. As per company estimate warranty costs would be 1% of sales in the first year and 2.5% of sales in the second year. By end of 2020 Purple Corporation had already spent $1,320 on warranty repairs. Perform all journal entries related to the warranty for 2020. Also Calculate the amount of Estimated Warranty Payable to be reported on the Balance Sheet on Dec 31, 2020.

b. On January 1, 2020, Purple Corporation issued $96,000, 5-year bonds, with coupon rate of 6%, paid semi-annually. Prepare the necessary journal entries to record the issue of the bond at face value and the payment of the first coupon on June 30, 2020.

Reference no: EM132902468

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