1. A company began selling a new product in 2022. The product includes a complimentary 5-year quality assurance warranty.

During 2022, the company had sales of the product of $10 million (on account) with COGS of $6 million. During 2022, the company incurred $110,000 (refunded cash) to settle warranty claims related to the product. At the end of 2022, it estimates that warranty claims in future years for units of the product that have already been sold will total $900,000.

a) Prepare the summary journal entry needed to recognize 2022 sales and COGS for the product

b) What balance of liability (warranties payable) should the company report on its December 31, 2022 balance sheet related to the product?

c) Prepare the summary journal entries needed to record warranty expense and warranty claims during 2022

During 2023, the company had sales of the product of $31 million (on account) with COGS of $24 million. During 2023, the company incurred $700,000 (refunded cash) to settle warranty claims related to the product. At the end of 2023, it estimates that warranty claims in future years for units of the product that have already been sold will total $3,100,000.

d) Prepare the summary journal entry needed to recognize 2023 sales and COGS for the product

h) What balance of liability (warranties payable) should the company report on its December 31, 2023 balance sheet related to the product?

f) Prepare the summary journal entries needed to record warranty expense and warranty claims during 2023

Answer rating: 100% (QA)

a Summary Journal Entry to Recognize 2022 Sales and COGS Date December 31 2022 1 To record sales Acc... View the full answer