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Stealth Devices Inc. warrants its products for one year. The estimated product warranty is 4% of sales. Assume that sales

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Stealth Devices Inc. warrants its products for one year. The estimated product warranty is 4% of sales. Assume that sales were $450,000 for July. In August, a customer received warranty repairs requiring $13,600 of parts.
a. Determine the warranty liability at July 31, the end of the first month of the current year.
b. What accounts are decreased for the warranty work provided in August?

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Survey of Accounting

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Authors: Carl S. Warren

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Question Posted: March 11, 2014 10:27:40
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