Question

The accounting records of Fired Up Ceramics included the following at January 1, 2018: (Click the icon to view the data.) In the past, Fired Up's warranty expense has been 7% of sales. During 2018, Fired Up made sales of $113,000 and paid $6,500 to satisfy warranty claims. Read the requirements. Requirement 1. Journalize Fired Up's warranty expense and warranty payments during 2018. Explanations are not required. (Record debits first, then credits. Exclude explanations from journal entries.) Journalize the warranty expense. Date Accounts Debit Credit Requirements 1. Journalize Fired Up's warranty expense and warranty payments during 2018. Explanations are not required. 2. What balance of Estimated Warranty Payable will Fired Up report on its balance sheet at December 31, 2018? Print Done

Answer 1

Answer:

Date	Account Titles and Explanation	Debit($)	Credit($)
Dec-31	Warranty expense(113000*7%)	7,910
	Accrued Warranty liability		7,910
	(To record warranty allowance)
Dec-31	Accrued Warranty liability	6,500
	Cash		6,500
	(To record warranty expenses paid in cash )

Accrued Warranty Payable
Cash account	6,500	-	Beginning balance
		7,910	Warranty expenses
		1,410	Ending balance

Note: Assume Beginning balance of Accrued warranty payable is $0