Question

salaries Federal income taxes to be withheld Federal unemployment tax rate (FUTA) State unemployment tax rate (after FUTA deduction) Social security tax rate Medicare tax rate $ 80,000 16,000 0.80% 5.40% 6.29% 1.45% The journal entry to record payroll for the January 2021 pay period should be Debit Credit 25) Panther Co. had a quality assurance warranty liability of $350.000 at the beginning of 2021 and $310.000 at the end of 2021. Warranty expense is based on 4% of sales, which were $50 million for the year. Required: 1) Make an entry to prepare current year's warranty Expense and 2)What amount of warranty costs were paid during 2021? Explanation: Warranty Liability 310,000

Answer 1

Solution:

1. Journal entry to record current year’s warranty Expense

Warranty Expense          To Warranty Liability (Warranty expense incurred during the year)

$ 2,000,000

$ 2,000,000

2. Computation of amount of Warranty costs paid during 2021

Amount of Warranty liability at the beginning Add: Warranty Expense incurred (4% of $ 50 million) Less: Amount of Warranty liability at the end	$ 350,000 2,000,000 (310,000)
Amount of Warranty costs paid during 2021	$ 2,040,000