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How do I determine the estimated warranty on Part B? Do I multiply by 100. Please advise.

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How do I determine the estimated warranty on Part B? Do I multiply by 100. Please advise.;Colin Company sells automatic can openers under a 75-day warranty for defective merchandise. Based on past experiences, Colin Company estimates that 3% of the units sold will become defective during the warranty period.;Management estimates that the average cost of replacing or repairing a defective unit is $15.00 The units sold and units defective that occurred during the last 2 months of 2006 are as follows;Month Units sold Units Defective Prior to December 31;November 30,000 600;December 32,000 400;Instructions;(a) Determine the estimated warranty liability at December 31 for the units sold in November and December.;Estimated warranties outstanding;Month Estimate Units Defective Outstanding;November Number Number Formula;December Number Number Formula;Total Formula Formula Formula;Estimated warranty cost Amount;Estimated warranty liability Formula;(b) Prepare the journal entries to record the estimated liability for warranties and the costs (assume actual costs of $15,000) incurred in honoring 1,000 warranty claims.;Account title Amount;Account title Amount;Account title Amount;Account title Amount;(c) Give the entry to record the honoring of 500 warranty contracts in January at an average cost of $15;Account title Amount;Account title Amount

 

Paper#25565 | Written in 18-Jul-2015

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