Question

help me with this question please, answer it all or none

Accrued Product Warranty Fosters Manufacturing Co. warrants its products for one year. The estimated product warranty is 5% of sales. Assume that sales were $424,000 for January. On February 7, a customer received warranty repairs requiring $300 of parts and $80 of labor. a. Journalize the adjusting entry required at January 31, the end of the first month of the current fiscal year, to record the accrued product warranty. Ir an amount box does not require an entry, leave it blank. Cash x O O Cash x Feedback Check My Work The accrued product warranty amount is recorded in the same period in which the sale is recorded, therefore following the matching concept. b. Journalize the entry to record the warranty work provided in February. If an amount box does not require an entry, leave it blank. Cash x Accounts Payable x Accounts Receivable x UU Previous

Answer 1

Estimated product warranty liability = Sales revenue x Percentage of warranty cost

= 424,000 x 5%

= $21,200

a)

Journal

January 31	Warranty expense	21,200
	Estimated warranty liability		21,200

b)

Journal

Feb. 7	Estimated warranty liability	380
	Repair parts		300
	Wages expense		80

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