A company sells its product 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 worth of parts to do the warranty work. Sales for June amounted to $450,000. a. Record the warranty expense for the month of June. b. Record the costs of the warranty work completed in June. c. If the Estimated Warranty Liability account had a credit balance of $10,000 on May 31, what is the account balance at June 30? Debit Credit a. b.
A company sells its product 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 worth of parts to do the warranty work. Sales for June amounted to $450,000. a. Record the warranty expense for the month of June. b. Record the costs of the warranty work completed in June. c. If the Estimated Warranty Liability account had a credit balance of $10,000 on May 31, what is the account balance at June 30? Debit Credit a. b.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
A company sells its product 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 worth of parts to do the warranty work. Sales for June amounted to $450,000.
a. Record the warranty expense for the month of June.
b. Record the costs of the warranty work completed in June.
c. 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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