Q1) Presley Company sells a product which includes a one-year warranty on parts and labor. In the year, 10,000 units are sold. Presley expects that 3% of the units will be defective and that average warranty cost will be $50 per unit. Actual warranty costs incurred in year were $14,000.
Instructions
Create journal entries to record (a) estimated warranty costs and (b) actual costs incurred.