126. Frazier Company began 2011 with a balance of $640 in Sales Tax payable. During the year, the company recorded taxable sales of $165,000. The ending balance in Sales Tax payable was $685. Frazier's sales tax rate is 5%.
a) How much sales tax did Frazier collect during 2011?
b) How much sales tax did Frazier pay during 2011?
127. Unger Company estimated that its warranty expense would be $2,125 for the current year. During the year Unger paid $950 to repair merchandise that was returned by customers.
a) What is the amount of warranty expense for the current year?
b) If this is the first year of operations, what is the amount of warranty liability that will be shown on the balance sheet at the end of the year?
128. At the beginning of 2011, Marshall, Inc. had a balance in the Warranty Payable account of $10,500. During the year Marshall sold for $450,000 several products that carried a two-year warranty. Marshall estimated that warranty expense would be 5% of sales for the year.
a) Prepare Marshall's year-end adjusting journal entry for warranty expense.
b) If Marshall's incurred actual warranty cost is $23,000 during 2011, what is the balance in the Warranty Payable account after the adjusting entry is made?