Bateman & Co. had sales of $800,000 in 2017. The company estimates that the cost
ID: 2432382 • Letter: B
Question
Bateman & Co. had sales of $800,000 in 2017. The company estimates that the cost of servicing products under warranty will average 3% of sales. a. Please prepare the adjusting entry at the end of 2017 to record the warranty expense. 8. Account Title Credit Warranty Payable was $11,600 at the beginning of 2017. Expenditures (all in cash) to satisfy warranty claims during 2017 were $20,400. Prepare the journal entry for the warranty expenditures. b. Account Title Debit Credit c. Compute the balance in Warranty Payable account at the end of 2017
Explanation / Answer
a. Journal Entry to record Warranty Expense
Warranty Expense (800000*3%)
$ 24,000.00
Warranty Payable
$ 24,000.00
(Being warranty payable for the year)
b. Warranty Expenditure journal Entry
Warranty Payable
$ 20,400.00
Cash
$ 20,400.00
(Warranty Claims paid during the year)
c. Closing balance of Warranty payable account.
Beginning Balance
$ 11,600.00
Add: Provisions made during year
$ 24,000.00
Total Liability
$ 35,600.00
Less: Claims Paid during the year
$ 20,400.00
Closing balance
$ 15,200.00
a. Journal Entry to record Warranty Expense
Warranty Expense (800000*3%)
$ 24,000.00
Warranty Payable
$ 24,000.00
(Being warranty payable for the year)
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