During august, boxer company sells $361,000 in merchandise that has a one year warranty. experience shows that warranty expenses average about 5% of the selling price. the warranty liability account has a credit balance of $12,300 before adjustment. customers returned merchandise for warranty repairs during the month that used $8,900 in parts for repairs. the entry to record the estimated warranty expense for the month is:

Question

Gloria Avery

Business

11 January, 10:55

During august, boxer company sells $361,000 in merchandise that has a one year warranty. experience shows that warranty expenses average about 5% of the selling price. the warranty liability account has a credit balance of $12,300 before adjustment. customers returned merchandise for warranty repairs during the month that used $8,900 in parts for repairs. the entry to record the estimated warranty expense for the month is:

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Answers (1)

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Rory Garcia · Answer 1

Debit Warranty Expense with $18,050; and credit Estimated Warranty Liability with $18,050.

Explanation:

Estimated warranty expenses = Selling price * 5% = $361,000 * 5% = $18,050

Therefore, the entry to record this to debit Warranty Expense with $18,050; and credit Estimated Warranty Liability with $18,050.

This will look in the journal as follows:

Details Dr ($) Cr ($)

Warranty Expense $18,050

Estimated Warranty Liability 18,050

To record the estimated warranty expenses for the month