Question

Cool Air, Inc. sells products with a one-year warranty covering parts and labor. The following table lists the company’s three major product lines, the percentage of the products sold in each product line that are returned while under warranty, and the average warranty-related cost incurred on each returned item.
Required:
(a) Compute the estimated product warranty expense that should be recorded by Cool Air at the end of April and prepare the appropriate adjusting entry.
(b) During the first week in May, Cool Air paid warranty-related costs of $6,800. Prepare the entry to record these payments.


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  • CreatedMarch 27, 2015
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