Lamar Industries warrants its products for one year. The estimated product warra

Question

Lamar Industries warrants its products for one year. The estimated product warranty is 3% of sales. Assume that sales were $190,000 for June. In July, a customer received warranty repairs requiring $185 of parts and $50 of labor.

A) Journalize the adjusting entry required at June 30, the end of the first month of the current year, to record the accrued product warranty.

B) Journalize the entry to record the warranty work provided in July. For a compound transaction, if an amount box does not require an entry, leave it blank or enter "0".

Explanation / Answer

A) June 30 warranty Expense Debit $ 5700

Accrued warranty liability credit $ 5700

B) Accrued warranty liability debit $ 235

Inventory credit $ 185

Wages Payable credit $ 50

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