A company sells sofas with a 6-month warranty. It is estimated that 2% of all units sold will need repairs under warranty at an estimated cost of $200 per unit. In January, the company sold 100,000 sofas at $1,750 each; and 500 sofas needed repairs during that same month. The total repairs amounted to $85,000 costs from the upholstery materials inventory. Prepare the journal entries to record (a) estimated warranty expense for January and (b) warranty repair costs for January.

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The Answer of A company sells sofas with a 6-month warranty. It is estimated that 2% of all units sold will need repairs under warranty at an estimated cost of $200 per unit. In January, the company sold 100,000 sofas at $1,750 each; and 500 sofas needed repairs during that same month. The total repairs amounted to $85,000 costs from the upholstery materials inventory. Prepare the journal entries to record (a) estimated warranty expense for January and (b) warranty repair costs for January.

A Company Sells Sofas with a 6-Month Warranty