Estimated Warranty Liability Savory Co. sold $307,000 of equipment during Januar

Question

Estimated Warranty Liability Savory Co. sold $307,000 of equipment during January under a six-month warranty. The cost to repair defects under the warranty is estimated at 4.5% of the sales price. On August 15, a customer required a $291 part replacement, plus $117 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

Explanation / Answer

31-Jan Warranty expense 13815 =307000*4.5%         Estimated warranty payable 13815 15-Aug Estimated warranty payable 408       Inventory 291       Wages payable/Cash 117

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