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12 January, 03:18

QS 9-9 Recording warranty repairs LO P4 On September 1, Home Store sells a mower (that costs $220) for $520 cash with a one-year warranty that covers parts. Warranty expense is estimated at 8% of sales. On January 24 of the following year, the mower is brought in for repairs covered under the warranty requiring $36 in materials taken from the Repair Parts Inventory. Prepare the September 1 entry to record the mower sale (and cost of sale) and the January 24 entry to record the warranty repairs. (Round your answers to 2 decimal places.)

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  1. 12 January, 06:58
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    Answer and Explanation:

    The journal entries are shown below:

    On September 1

    Cash $520

    Sales $520

    (Being the sale is recorded)

    On September 1

    Cost of goods sold $220

    To Merchandise inventory $220

    (Being the cost is recorded)

    On September 1

    Warranty expense $41.6 ($520 * 8%)

    To Estimated warranty liability $41.60

    (Being the warranty expense is recorded)

    On July 24

    Estimated warranty liability $36

    To Repair parts inventory $36

    (Being the estimated warranty liability is recorded)
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