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In 2013, Warranty expense is estimated at 2% of sales revenue. Franconia Sales offers warranties on...

In 2013, Warranty expense is estimated at 2% of sales revenue. Franconia Sales offers warranties on all their electronic goods.Franconia had $500,000 of sales. In the same year, Franconia paid out $7,500 of warranty payments.

Calculate warranty expense of the year. Journalize necessary transactions. Show your calculations.

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Answer #1

ANSWER:

Sales revenue 500000
X Warranty expense % 2%
Warranty expense of the year 10000
General Journal Debit Credit
Warranty expense 10000
      Estimated warranty payable 10000
Estimated warranty payable 7500
       Cash 7500

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