Question

A company estimates that warranty expense will be 4% of sales. The company's sales for the current period are $233,000. The current period's entry to record the warranty expense is:

Answer 1

Dr Warranty expenses 9,320

Cr Estimated Warranty Liability 9,320

Step-by-step explanation:

Preparation of thecurrent period's entry to record the warranty expense for A company

Since A company estimates that the warranty expense will be 4% of sales while the sales for the current period are $233,000 this means we have to find the 4% of $233,000 which gives us 9,320.

Hence the transaction will be recorded as :

Dr Warranty expenses 9,320

(4%×233,000)

Cr Estimated Warranty Liability 9,320