On July 1, Gable Co. sells a product that includes a two-year warranty on parts. In...

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On July 1, Gable Co. sells a product that includes a two-year warranty on parts. In July 5,000 units are sold. Accountants estimate that 2% of the units will be defective and that the average warranty costs will be $20 per unit. Prepare following entries: (a) To accrue the estimated warranty cost and (b) an entry on Sept. 30 to record 25 defective units. Date July 31 Sept. 30 Date Jan. 31 Account May 15 Problem 6 On Jan 2, Gasser Co. sells a product that includes a two-year warranty on parts. In Jan. 15,000 units are sold. Accountants estimate that 3% of the units will be defective and that the average warranty costs will be $15 per unit. Prepare the adjusting entry at Jan. 31 to accrue the estimated warranty cost. Also, prepare an entry to record 67 defective units for May. Debit Account Credit Debit Credit On July 1, Gable Co. sells a product that includes a two-year warranty on parts. In July 5,000 units are sold. Accountants estimate that 2% of the units will be defective and that the average warranty costs will be $20 per unit. Prepare following entries: (a) To accrue the estimated warranty cost and (b) an entry on Sept. 30 to record 25 defective units. Date July 31 Sept. 30 Date Jan. 31 Account May 15 Problem 6 On Jan 2, Gasser Co. sells a product that includes a two-year warranty on parts. In Jan. 15,000 units are sold. Accountants estimate that 3% of the units will be defective and that the average warranty costs will be $15 per unit. Prepare the adjusting entry at Jan. 31 to accrue the estimated warranty cost. Also, prepare an entry to record 67 defective units for May. Debit Account Credit Debit Credit

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Solution to Problem 5 a To accrue the estimated warranty cost on July 31 Estimated warranty cost per ... View the full answer