OBJ. 5 EX 11-20 Accrued product warranty Parker Manufacturing Co. warrants its p

ID: 2330769 • Letter: O

Question

OBJ. 5 EX 11-20 Accrued product warranty Parker Manufacturing Co. warrants its products for one year. The estimated product war- ranty is 2.5% of sales. Assume that sales were $600,000 for January. In February, a customer received warranty repairs requiring $200 of parts and $110 of labor. a. Journalize the adjusting entry required at January 31, the end of the first month of the current fiscal year, to record the accrued product warranty b. Journalize the entry to record the warranty work provided in February

Explanation / Answer

In the Books of Parker Manufacturing Co

Journal Entries ( Extract of Warrent entries )

For the month Ending Jan & Feb

Warranty Expense

Accrued Warranty Liablity

( 2.5% of USD 600,000)

USD 150,00

Accrued Warranty Liability

cash

( USD 200 for pats + USD 110 for Labour )

USD 310

Date Account titles Ref Debit credit Jan 31