Munchko Office Supplies offers a 90-day exchange policy on all of the products it sells. Munchko estimates that 3% of its total sales will be returned for exchange each month. At the beginning of July, Munchko had a balance in its Product Warranty Payable account of $4,500. During July, Munchko sold 800 office chairs for $350 each, and 25 office chairs were returned for exchange by customers. Munchko had purchased the office chairs from a regional supplier for $175 each. In August, Munchko sold another 700 office chairs, and 23 office chairs were returned for exchange by customers.
a. Provide the journal entry to record the 25 office chairs exchanged in July.
b. Provide the journal entry to record the warranty expense related to office chairs sold in July.
c. Provide the journal entry to record the 23 office chairs exchanged in August.
d. Provide the journal entry to record the warranty expense related to office chairs sold in August.
e. Determine the balance in the Product Warranty Payable account at the end of August.