ransaction $4$:

As mentioned earlier, the Large Mart store is closed for the month of June. As a result, the manager

of the accounting department has decided that warranty provisions for all items sold during the year

will be calculated and recorded now $($on the $6$ June $201$X$.)$ because it is clear that there will be no

further sales before the end of the financial year $($which is the $30$ June $201$X$).$

Large Mart determines its annual additions to the provisions for warranty account based on past

experience. Using information from earlier years, the manager of the accounting department has

calculated that Large Mart will have approximately $$0\mathrm{.}05$ of warranty costs for each dollar of sales.

Required:

$1.$ Determine the amount of warranty provisions that Large Mart must recognise in its financial

statements for all sales made during the financial year

$2.$ Provide all journal entries that are necessary to record the warranty provision for the year

$($remember that on the $6$ June $201$X we already know that there will not be any additional

sales transactions before the end of the financial year$)$