A company sells its products subject to a warranty that covers the cost of parts for repairs during the six months after the date of sale. Warranty costs are estimated to be 6% of sales. During the month of June, the company performed warranty work and used $12,000 of parts to perform the warranty work. Sales for June were $450,000. Record the warranty expense for the month of June in the general journal for Problem 7.Record the costs of the warranty work completed in June in the general journal for Problem 7.When journal entries are complete, upload the general journal to this problem.If the Estimated Warranty Liability account had a credit balance of $10,000 on May 31, what is the account balance at June 30? __________________________________

Warranty expenses = Sales for June x estimated Warranty costs % = $450,000 x 6% = $27,000

Answered: A company sells its products subject to…

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter9: Current Liabilities And Contingent Obligations

Section: Chapter Questions

Problem 10RE

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A company sells its products subject to a warranty that covers the cost of parts for repairs during the six months after the date of sale. Warranty costs are estimated to be 6% of sales. During the month of June, the company performed warranty work and used $12,000 of parts to perform the warranty work. Sales for June were $450,000.

Record the warranty expense for the month of June in the general journal for Problem 7.
Record the costs of the warranty work completed in June in the general journal for Problem 7.
When journal entries are complete, upload the general journal to this problem.
If the Estimated Warranty Liability account had a credit balance of $10,000 on May 31, what is the account balance at June 30? __________________________________

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