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Recording Assurance-Type Warranty Liability Finisher Inc. sells merchandise for $450,000 in 2020 that includes a three-year l
E pepe cen Cash and Payables Accounts Receivable Der Inventory Equipment Copyright Accounts Payable Accrued Compensation Defe
rep cen Deferred Revenue Estimated Litigation Liability Interest Payable en Salaries Payable Sales Taxes Payable Warranty Lia
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Answer #1

a) Warranty expense $4,500 (Debit)

Warranty Liability $4,500 (Credit)

($450,000 * 1% = $4,500)

(Warranty expense recognised against warranty liabilty as per matching principal)

b) Warranty Liability $1,440 (Debit)

Cash and Payables $1,440 (Credit)

(Actual warranty costs realised against warranty liabilty)

It has been assumed that warranty costs has been paid in the form of cash.

I hope I've solved to the point. Please feel free to ask any queries and do give a thumbsup if the solution was satisfactory. Thankyou.

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