Business, 27.04.2021 15:10 lovenahofer

Lily Company sells automatic can openers under a 75-day warranty for defective merchandise. Based on past experience, Lily estimates that 4% of the units sold will become defective during the warranty period. Management estimates that the average cost of replacing or repairing a defective unit is $20. The units sold and units defective that occurred during the last 2 months of 2020 are as follows. Months Units Sold Units Defective Prior to December 31
November 37,300 746
December 39,300 491
Prepare the journal entries to record the estimated liability for warranties and the costs incurred in honoring 1,237 warranty claims. (Assume actual costs of $24,740.)
Give the entry to record the honoring of 500 warranty contracts in January at an average cost of $20.

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Lily Company sells automatic can openers under a 75-day warranty for defective merchandise. Based on...