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BE11-6 Diaz Company

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BE11-6 On December 1, Diaz Company introduces a new product that includes a one-year
warranty on parts. In December, 1,000 units are sold. Management believes that 5% of the units
will be defective and that the average warranty costs will be $80 per unit. Prepare the adjusting
entry at December 31 to accrue the estimated warranty cost.

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