sold a product without warranty card and just assume that the receipts as a warranty card.

a) WMB began production of a new washing machine in June 2011, and by December 2011, sold 120,000 units of washing machines to various retailers for RM500 each. Each washing machine is under a one-year warranty. The company estimates that its warranty expense per washing machine will amount to RM25. At year-end, the company had already paid out RM1,000,000 in warranty expenses. WMB¿s statement of comprehensive income shows warranty expenses of RM1,000,000 for 2011. WMB accounts for warranty costs on the accrual basis. Based on your interview with the sales staffs, you found that some of the customers were only given cash receipts on the purchases without accompanying warranty cards. Write letters of memorandum to be incorporated in your audit reports working papers explaining situations in a) to d). Your explanation should include i) the problem in each situation, if any, ii) your advice on the situation with corresponding journal entries if necessary so that these situations are re