Homework Answers
Answer :
(1)
Warranty Expense for 2014 = Settlements made during 2014 - Opening Settlements liability + Closing Settlement liability
= 378 - 483 + 277
Warranty Expense for 2014 = $172
Warranty Expense for 2015 = Settlements made during 2015 - Opening Settlements liability + Closing Settlement liability
= 276 - 277 + 261
Warranty Expense for 2015 = $260
So,
| 2015 | 2014 | |
| Warranty expense | $260 | $172 |
Journal entries to record both the warranty expense for 2015 and the payments made under the warranty during the year :
| Transaction | General Journal | Debit | Credit |
| 1 | Warranty expense | 260 | |
| Estimated warranty liability | 260 | ||
| 2 | Estimated warranty liability | 276 | |
| Cash | 276 |
(a)
| 2015 | 2014 | 2013 | |
| Warranty Expense | 260 | 172 | 476 |
| Net Sales | 82,541 | 93,593 | 99,167 |
| Warranty Expense/Net Sales | 0.31% | 0.18% | 0.48% |
(b)
The warranty expense decreased from $476 in 2013 to $172 in 2014 and $260 in 2015.
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