In 2013, BMJ Plumbing Company sold 250 water heaters for $1,050 each. The water heaters carry a 5-year warranty for repairs. BMJ Plumbing estimates that repair costs will average 2% of the total selling price.Required:1.  How much is recorded in the warranty liability account as a result of selling the water heaters during 2013, assuming no warranty service has yet been performed?$ Hide  2.  Prepare the necessary adjusting entry at December 31, 2013.      Dec. 31        (Record warranty expense)

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Asked Oct 27, 2019
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In 2013, BMJ Plumbing Company sold 250 water heaters for $1,050 each. The water heaters carry a 5-year warranty for repairs. BMJ Plumbing estimates that repair costs will average 2% of the total selling price.

Required:

1.  How much is recorded in the warranty liability account as a result of selling the water heaters during 2013, assuming no warranty service has yet been performed?
$



  Hide    

2.  Prepare the necessary adjusting entry at December 31, 2013.



 
 
       
Dec. 31
 
 
 
 
 
 
 
 
(Record warranty expense)
   
       

 

 
 

 

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Warrant liability is calculated below: 250*1050*2/100 = $5,250

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