The balance of the Estimated Warranty Liability account was $13,050 on January 1

Question

The balance of the Estimated Warranty Liability account was $13,050 on January 1, 2013. and $18,300 on December 31. 2013. Based on an analysis of warranty claims during the past several years this year's warranty provision was established at 1.5% of sales, and sales during the year were $1,410,000. What amount of warranty expense will appear on the income statement for the year ended December 31, 2013? Warranty expense $ 2,115.000 What were the actual costs of servicing products under warranty during the year?

Explanation / Answer

a. Calculation warranty expense

b. Actual cost servicing products under warranty = 1.5% x 1410000

= $21150

Opening warranty provision 13050 Add: Provisions made during the year 21150 Less: Closing balance 18300 Warranty expenses for the year 15900

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