Rich Harvest Company Sells a Product That Includes a One-Year

Essay

Rich Harvest Company sells a product that includes a one-year warranty on parts and labor. During the year 10000 units are sold. Rich Harvest 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 $14000.
Instructions
Prepare the journal entries to record (a) the estimated warranty costs and (b) the actual costs incurred.