A Company Sells Computers with a Six-Month Warranty

Essay

A company sells computers with a six-month warranty.In January,the company sold 100,000 computers at $1,750 each and 1,500 computers were turned in for repairs during that same month.The total repairs amounted to $185,000 costs from the computer parts 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.