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Prepare one summary journal entry at december

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Question - Carla Vista Company began selling game consoles on November 1, 2021. The company offers a 75-day warranty for defective merchandise. Based on past experience with other similar products, Carla Vista estimates that 2.60% of the units sold will become defective in the warranty period, and that the average cost of replacing or repairing a defective unit is $20. In November, Carla Vista sold 39,000 units and 570 defective units were returned. In December, Carla Vista sold 50,000 units and 810 defective units were returned. The actual cost of replacing the defective units was $27,600.

Prepare a journal entry to accrue for the estimated warranty costs for the November and December sales at December 31, 2021.

Prepare one summary journal entry at December 31, 2021, to record the cost of replacing the defective game consoles returned during November and December.

What amounts will be included in Carla Vista's 2021 income statement and balance sheet at December 31, 2021, with regard to the warranty?

Reference no: EM133121553

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