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[The following information applies to the questions displayed below] Hitzu Company sold a copier (that costs $5,500 ) for $11,000 cash with a two-year parts warranty to a customer on August 16 of Year 1 . Hitzu expects warranty costs to be 3% of dollar sales. It records warranty expense with an adjusting entry on December 31. On January 5 of Year 2, the copier requires on-site repairs that are completed the same day. The repairs cost $106 for materials taken from the parts inventory. These are the only repairs required in Year 2 for this copier. 1. How much warranty expense does the company report for this copier in Year 1 ? 2. How much is the estimated warranty liability for this copier as of December 31 of Year 1 ? 3. How much is the estimated warranty liability for this copier as of December 31 of Year 2? 4. Prepare journal entries to record (b) the copier's sale: (b) the adjustment to recognize the warranty expense on December 31 of Year 1; and (c) the repairs that occur on January 5 of Year 2. Complete this question by entering your answers in the tabs below. 1. How much warranty expense does the company report for this copier in Year 1 ? 2. How much is the estimated warranty liability for this copier as of December 31 of Year 1 ? 3. How much is the estimated warranty liability for this copler as of December 31 of Year 2 ?
[The following information applies to the questions displayed below] Hitzu Company sold a copier (that costs $5,500 ) for $11,000 cash with a two-year parts warranty to a customer on August 16 of Year 1 . Hitzu expects warranty costs to be 3% of dollar sales. It records warranty expense with an adjusting entry on December 31. On January 5 of Year 2, the copier requires on-site repairs that are completed the same day. The repairs cost $106 for materials taken from the parts inventory. These are the only repairs required in Year 2 for this copier. 1. How much warranty expense does the company report for this copier in Year 1 ? 2. How much is the estimated warranty liability for this copier as of December 31 of Year 1 ? 3. How much is the estimated warranty liability for this copier as of December 31 of Year 2? 4. Prepare journal entries to record (b) the copier's sale: (b) the adjustment to recognize the warranty expense on December 31 of Year 1; and (c) the repairs that occur on January 5 of Year 2. Complete this question by entering your answers in the tabs below. 1. How much warranty expense does the company report for this copier in Year 1 ? 2. How much is the estimated warranty liability for this copier as of December 31 of Year 1 ? 3. How much is the estimated warranty liability for this copler as of December 31 of Year 2 ?
Final answer:The warranty expense for the copier in Year 1 is $330. The estimated warranty liability for the copier as of December 31 of Year 1 is $468.60. The estimated warranty liability for the copier as of December 31 of Year 2 is zero.Explanation:1. To calculate thewarrantyexpense for the copier in Year 1, we need to determine 3% of the sales price. 3% of $11,000 is $330. Therefore, the company reports $330 as warranty expense for this copier in Year 1.2. The estimated warranty liability for this copier as of December 31 of Year 1 would be the expected warranty costs for the remaining warranty period. Since the copier was sold on August 16 of Year 1 and the warranty is for two years, the remaining warranty period at December 31 of Year 1 is about 1.4 years (365 days x 1.4 / 365 = 1.42). Therefore, the estimated warranty liability would be $330 x 1.42 = $468.60.3. The estimated warranty liability for this copier as of December 31 of Year 2 would be zero, since there are no repairs required in Year 2 for this copier.Learn more about warranty expense here:brainly.com/question/34501349#SPJ11...