Iggy Sales, Inc offers warranties on all its electronic goods

Warranty expense is estimated at 3.5% of sales revenue. In 2017, Iggy had sales of $333,000. In the same year, Iggy replaced defective goods with merchandise inventory costing $8,750. Prepare the journal entry to record the replacement of defective goods.
What will be an ideal response


Estimated Warranty Payable 8,750
Merchandise Inventory 8,750 .Merchandise Inventory Repaired = $8,750

Business

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