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Q1) Presley Company sells a product which includes a one-year warranty on parts and labor. In the year, 10,000 units are sold. Presley expects that 3% of the units will be defective and that average warranty cost will be $50 per unit. Actual warranty costs incurred in year were $14,000.


Create journal entries to record (a) estimated warranty costs and (b) actual costs incurred.


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