Quantas Industries sold $300,000 of consumer electronics during January under a one-year warranty. The cost to repair defects under the warranty is estimated at 6% of the sales price. On June 20, a customer was given $183 cash under terms of the warranty. Journalize the entry to record (a) the estimated warranty expense on January 31 for January sales on page 10 of the journal and (b) the June 20 warranty work on page 14 of the journal. Refer to the Chart of Accounts for exact wording of account titles.

January 31.

Warranty Expense $18,000  (debit)

Warranty Provision $18,000 (credit)

June 20.

Warranty Provision $183 (debit)

Cash $183 (credit)

Explanation:

There is no option on the customer to take the warranty or not. There this type of Warranty is known as an Assurance Type Warranty.

Assurance type warranties are accounted in terms of the Provision Standards as follows ;

Entry when the warranty is granted

Warranty Expense $18,000  (debit)

Warranty Provision $18,000 (credit)

Being recognition of warranty cost and provision.

Warranty Expense $300,000 × 6% = $18,000

When the Warranty Claim is subsequently received.

Warranty Provision $183 (debit)

Cash $183 (credit)

Being utilization of Provision when the warranty claim is received.

due to the changes the federal reserve is making the unused reserves will impact the economy by them facing inflation. inflation is definfed as the increase in pricing of a good or service but the decline of the value of money used for purchasing those items. when the economy has a high inflation rate, they are subject to money loss and hurt on the economy.

answer; foreign exchange transaction;