Warranty: It is an agreement made by the company to provide guarantee against the defects in the products. To Journalize: Estimated warranty expense on January 31 for January sales.

Question

Estimated Warranty Liability Savory Co. sold $764,000 of equipment during January under a one-year warranty. The cost to repair defects under the warranty is estimated at 6% of the sales price. On August 15, a customer required a $298 part replacement, plus $92 of labor under the warranty. Required: (a) Provide the journal entry for the estimated warranty expense on January 31 for January sales. Jan. 31 (b) Provide the journal entry for the August 15 warranty work. If an amount box does not require an entry, leave it blank. Aug. 15

Answer 1

Question

Chapter 11, Problem 11.7APE

A.

To determine

Warranty: It is an agreement made by the company to provide guarantee against the defects in the products.

To Journalize: Estimated warranty expense on January 31 for January sales.

B.

To determine

To Journalize: Warranty payments for the company.

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