I. The SPC company manufactures gronks. The company offers a 90-day warranty from the last day of the month in which the purchase takes place. SPC’s experience is that approximately 6% of their monthly sales are returned and replaced under the warranty conditions. June sales were $481,000.
The following warranty claims were made against June sales:
|
July 8 |
$ 250 |
Aug. 4 |
$1,800 |
Sept. 2 |
$1,125 |
Oct. 1 |
$1,200 |
|
July 16 |
$ 900 |
Aug. 14 |
$ 275 |
Sept. 5 |
$ 150 |
Oct. 14 |
$ 500 |
|
July 26 |
$ 425 |
Aug. 25 |
$ 425 |
Sept. 18 |
$ 800 |
Oct. 21 |
$2,000 |
|
Aug . 29 |
$ 550 |
Sept. 29 |
$ 850 |
Oct. 30 |
$ 900 |
||
Required: 1. Prepare the journal entry to record the warranty expense for June.
2. What is the expiration date of the warranty?
3. Prepare journal entries to record each month’s warranty claims. You may prepare a summary entry for each month.
4. Prepare the journal entry to close the warranty period for June sales.
