Question

Estimated Warranty Liability Cook-Rite Co. sold $687,000 of equipment during January under a six-month warranty. The cost to repair defects under the warranty is estimated at 7.5% of the sales price. On August 15, a customer required a $213 part replacement, plus $186 of labor under the warranty Required: (a) Provide the journal entry for the estimated warranty expense on January 31 for January sales Jan. 31 L U C (b) Provide the journal entry for the August 15 warranty work. If an amount box does not require an entry, leave it blank. Aug. 15 -

Answer 1

Solution a:

Date	Particulars	Debit	Credit
31-Jan	Product Warranty Expense (687000*7.5%)	$51,525
	Product Warranty Payable		$51,525

Solution b:

Date	Particulars	Debit	Credit
15-Aug	Product Warranty Payable	$399
	Supplies		$213
	Wages Payable		$186