Estimated Warranty Liability Quantas Industries sold $325,000 of consumer electr

Question

Estimated Warranty Liability

Quantas Industries sold $325,000 of consumer electronics during July under a nine-month warranty. The cost to repair defects under the warranty is estimated at 4.5% of the sales price. On November 11, a customer was given $220 cash under terms of the warranty.

(a) Provide the journal entry for the estimated warranty expense on July 31 for July sales.

July 31

  

  

  

  

(b) Provide the journal entry for the November 11 cash payment.

Nov. 11

  

  

  

  

Hide

(a) Provide the journal entry for the estimated warranty expense on July 31 for July sales.

July 31

  

  

  

  

Explanation / Answer

(a)

Journal entry for the estimated warranty expense on July 31 for July sales

Date

Accounts Titles / Explanations

Debit

Credit

July. 31

Warranty expense (325000*4.5%)

$       14,625

Accrued warranty liability

$     14,625

(Being Warranty Expense recorded)

(b)

Journal entry for the November 11 cash payment

Date

Accounts Titles / Explanations

Debit

Credit

Nov. 11

Accrued warranty liability

$            220

Cash

$          220

(being expense paid)

(a)

Journal entry for the estimated warranty expense on July 31 for July sales

Date

Accounts Titles / Explanations

Debit

Credit

July. 31

Warranty expense (325000*4.5%)

$       14,625

Accrued warranty liability

$     14,625

(Being Warranty Expense recorded)

(b)

Journal entry for the November 11 cash payment

Date

Accounts Titles / Explanations

Debit

Credit

Nov. 11

Accrued warranty liability

$            220

Cash

$          220

(being expense paid)

Related Questions

Navigate

• Browse (All)
• Browse E
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.