Answer:
a.
Feb. 28 Product Warranty Expense 12,000
Product Warranty Payable 12,000
To record warranty expense for February,
6% × $200,000.
b.
July 24 Product Warranty Payable 92
Supplies 60
Wages Payable 32
PE 11-7A Estimated warranty liability
Kyrgyz Co. sold $200,000 of equipment during February under a one-year warranty. The cost to repair defects under the warranty is estimated at 6% of the sales price. On July 24, a customer required a $60 part replacement, plus $32 of labor under the warranty. Provide the journal entry for (a) the estimated warranty expense on February 28 for February sales, and (b) the July 24 warranty work.
Answer:
a.
Feb. 28 Product Warranty Expense 12,000
Product Warranty Payable 12,000
To record warranty expense for February,
6% × $200,000.
b.
July 24 Product Warranty Payable 92
Supplies 60
Wages Payable 32
Answer:
a.
Feb. 28 Product Warranty Expense 12,000
Product Warranty Payable 12,000
To record warranty expense for February,
6% × $200,000.
b.
July 24 Product Warranty Payable 92
Supplies 60
Wages Payable 32