CCC11

(a)

CONTINUING COOKIE CHRONICLE

Estimated liability, 2010

30 mixers sold X 10% = 3 mixers X $60 = $180

(b) 2010
Dec. 31 Warranty Expense .........................................
Warranty Liability .....................................
(c)

180
180

2011
Warranty Liability2010 .............................
Cash..............................................................

210

Warranty Liability2011 .............................

Cash..............................................................

55

210

55

(d) Estimated liability, Dec. 31, 2011

40 mixers sold X 10% = 4 mixers; 4 X $60................
Less: Two already returned X $60 .............................
Estimated liability Dec. 31, 2011 ..................................
Current balance in account (debit balance).............
Required adjustment .......................................................

$240
(120)
120
85
$205

Note that there is no longer any liability outstanding for the mixers
sold in 2010. The one-year warranty period has expired.

Copyright 2009 John Wiley & Sons, Inc.

Weygandt, Accounting Principles, 9/e, Continuing Cookie Chronicles

(For Instructor Use Only)

11-1

CCC11 (Continued)

(d) (Continued)
Date
2010
Dec. 31
2011

Warranty Liability
Ref.
Debit

Explanation
Adjusting entry

180

4 returned mixers (2010)

2 returned mixers (2011)
(e)

Credit

210
55

Balance
180
(30)
(85)

2011
Dec. 31

Date
2010
Dec. 31
2011

Dec. 31

Warranty Expense ...........................

Warranty Liability .......................

Warranty Liability
Ref.
Debit

Explanation
Adjusting entry

4 returned mixers (2010)

2 returned mixers (2011)
Adjusting entry

Copyright 2009 John Wiley & Sons, Inc.

205
205

Credit

Balance

180

180

205

(30)
(85)
120

210
55

Weygandt, Accounting Principles, 9/e, Continuing Cookie Chronicles

(For Instructor Use Only)

11-2