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Prepare the journal entries to record the transactions

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Question - The following information is available for a retail store for the month of February:

1. Wahlberg Computers sells computers for $2,500 each on account. On February 1, Wahlberg sold 20 computers. The cost of each computer sold was $1,000. The store uses the perpetual inventory system.

2. It is estimated that the warranty expense is 5% of gross sales. A journal entry is prepared on February 1.

3. During February, Wahlberg replaced two computers due to product warranty complaints for products purchased in a prior month.

4. A customer fell in the store and is seeking $100,000 in damagers. Wahlberg's attorney believes the case is frivolous because the customer has similar lawsuits pending against other retail stores.

5. A customer is suing Wahlberg Computers for $100,000 because the customer's computer purchased from Wahlberg Computers started a fire and destroyed the customer's residence. Wahlberg's attorney believes the customer will probably win the case and receive $100,000.

Prepare the journal entries to record the transactions above. Omit explanations.

Reference no: EM131711580

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