Business, 04.07.2020 01:01 25linm

Hitzu Co. sold a copier (that costs $4,500) for $9,000 cash with a two-year parts warranty to a customer on August 16 of Year 1. Hitzu expects warranty costs to be 6% 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 $114 for materials taken from the repair parts inventory. These are the only repairs required in Year 2 for this copier. Based on experience, Hitzu expects to incur warranty costs equal to 4% of dollar sales. It records warranty expense with an adjusting entry at the end of each year. Required:
a. How much warranty expense does the company report in 2015 for this copier?
b. How much is the estimated warranty liability for this copier as of December 31, 2015?
c. How much warranty expense does the company report in 2016 for this copier?
d. How much is the estimated warranty liability for this copier as of December 31, 2016?

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Hitzu Co. sold a copier (that costs $4,500) for $9,000 cash with a two-year parts warranty to a cust...