Prepare journal entry to recognize junk-disorderly warranty


Question: In 2027, Junk and Disorderly (a second-hand sports equipment store) sold 5,000 mountain bikes. Junk and Disorderly offered an in-store, no-charge, two-year warranty on each bike sold. Company management estimates that the average cost of providing the warranty is $8 per unit in the first year of coverage and $11 per unit in the second year. Junk and Disorderly' s warranty-related expenditures totaled $36,500 for labor costs during 2027. a. Prepare the journal entry to recognize Junk and Disorderly' s warranty expense in 2027. ACCOUNT NAME Amount (debits are positive, credits negative)

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Accounting Basics: Prepare journal entry to recognize junk-disorderly warranty
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