Problem 1 (7.5 points)

Stone, Inc., sells its products with a one-year warranty. The estimated product warranty is 4% of sales. Assume that Stone had sales of $172,000 during January this year. On February 25, a customer received warranty repairs requiring $64 of labor and $38 of parts.

Required:

Record the adjusting entry to accrue warranty expense on January 31.

Record the journal entry for the warranty work provided in February.

Account Title Debit Credit

Problem 2 (8.5 points)

Assume, that on March 8, 2021, Starbucks Corporation, borrowed $440 million cash from JP Morgan Chase to meet short-term obligations. Starbucks signed a 6% note and promised to repay the $440 million in 150 days. All interest will be paid when the note is due. Assume the company records only the two entries: borrowing and payment. Use 360-day year and round your answer to the nearest dollar.

Required:

Find the maturity date of the note. Maturity date is:

Record the issuance of the note on March 8.

Record payment of the note and interest at maturity.

Account Titles Debit Credit