At 30 June 2020, Ting Sun Electronics adjusted its Provision for Warranties so that it would be
Question:
At 30 June 2020, Ting Sun Electronics adjusted its Provision for Warranties so that it would be equal to 5% of sales for the year ended on that date. Sales for the year ended 30 June 2020 were $1 600 000 and the Provision for Warranties before the adjustment was $47 000. On 6 October 2020, a successful claim for warranty on faulty goods to the cost of $900 was made on Ting Sun Electronics.
Required
(a) Prepare the general journal entry at 30 June 2020 to adjust the Provision for Warranties to the required level.
(b) Record the payment of the warranty claim on 6 October 2020 in general journal format.
Step by Step Answer:
Financial Accounting
ISBN: 9780730363217
10th Edition
Authors: John Hoggett, John Medlin, Keryn Chalmers, Claire Beattie, Andreas Hellmann, Jodie Maxfield