Estimated Warranty LiabilitySavory Co. sold $764,000 of equipment during January under a one-year warranty. The cost to repair defects under the warranty is estimated at 6% of the sales price. On August 15, a customer required a $298 part replacement, plus $92 of labor under the warranty.Required:(a)  Provide the journal entry for the estimated warranty expense on January 31 for January sales.Jan. 31       (b)  Provide the journal entry for the August 15 warranty work. If an amount box does not require an entry, leave it blank.Aug. 15

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Asked Jan 17, 2020
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Estimated Warranty Liability

Savory Co. sold $764,000 of equipment during January under a one-year warranty. The cost to repair defects under the warranty is estimated at 6% of the sales price. On August 15, a customer required a $298 part replacement, plus $92 of labor under the warranty.

Required:

(a)  Provide the journal entry for the estimated warranty expense on January 31 for January sales.

Jan. 31      
       

(b)  Provide the journal entry for the August 15 warranty work. If an amount box does not require an entry, leave it blank.

Aug. 15      
       
       
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Step 1
  1. Record journal entry for the estimated warranty expense on January 31 for January sales as shown below:

 

Estimated warranty expense is 6% of January sales i.e. $45,840. The warranty...

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