Prist Co. had not provided a warranty on its products, but competitive pressures forced management to add

Question:

Prist Co. had not provided a warranty on its products, but competitive pressures forced management to add this feature at the beginning of 2019. Based on an analysis of customer complaints made over the past two years, the cost of a warranty program was estimated at 0.7% of sales. During 2019, sales totaled $3,600,000. Actual costs of servicing products under warranty totaled $22,100.


Required:

Use the horizontal model (or write the journal entries) to show the effect of having the warranty program during 2019.

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Accounting What the Numbers Mean

ISBN: 978-1260565492

12th edition

Authors: David Marshall, Wayne McManus, Daniel Viele

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