A Company Sells Sofas with a 6-Month Warranty

Essay

A company sells sofas with a 6-month warranty.In January,the company sold 100,000 sofas at $1,750 each;and 500 sofas needed repairs during that same month.The total repairs amounted to $85,000 costs from the upholstery materials inventory.It is estimated that 2% of all units sold will need repairs under warranty at an estimated cost of $200 per unit.Prepare the journal entries to record (a)estimated warranty expense for January and (b)warranty repair costs for January.