ranty liability The following information applies to the questions displayed bel

Question

ranty liability The following information applies to the questions displayed below] Computer Wholesalers restores and resells notebook computers. It originally acquires the notebook computers from corporations upgrading their computer systems, and it backs each notebook it sells with a 90-day warranty against defects. Based on previous experience, Computer Wholesalers expects warranty costs to be approximately 6% of sales. Sales for the month of December are $440,000. Actual warranty expenditures in January of the following year were $15,000. Hints References eBook & Resources Hint#1 Check my work

Explanation / Answer

$ Sales             440,000.00 approximate Warranty expense & warranty liability 6% of sales   that is 440000*6%                26,400.00 Actual warranty expenditure                15,000.00 therefore net warranty liability=approximate warranty expense -actual warranty expenditure                                                                 =26400-15000                                                                 =$ 11400 WARRANTY LIABILITY ACCOUNT= $ 11400

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