S11-11 Accounting for warranty expense and warranty payable Learning Objective 3 Trail Runner guarantees its snowmobiles for three years. Company experience indicates that warranty costs will be approximately 5% of sales. Assume that the Trail Runner dealer in Colorado Springs made sales totaling $600,000 during 2018. The company received cash for 20% of the sales and notes receivable for the remainder. Warranty payments totaled $10,000 during 2018. Requirements 1. Record the sales, warranty expense, and warranty payments for the company. Ignore cost of goods sold. 2. Assume the Estimated Warranty Payable is $0 on January 1, 2018. Post the 2018 transactions to the Estimated Warranty Payable T-account. At the end of 2018, how much in Estimated Warranty Payable does the company owe?

S11-11 Accounting for warranty expense and warranty payable Learning Objective 3 Trail Runner guarantees its snowmobiles for three years. Company experience indicates that warranty costs will be approximately 5% of sales. Assume that the Trail Runner dealer in Colorado Springs made sales totaling $600,000 during 2018. The company received cash for 20% of the sales and notes receivable for the remainder. Warranty payments totaled $10,000 during 2018. Requirements 1. Record the sales, warranty expense, and warranty payments for the company. Ignore cost of goods sold. 2. Assume the Estimated Warranty Payable is $0 on January 1, 2018. Post the 2018 transactions to the Estimated Warranty Payable T-account. At the end of 2018, how much in Estimated Warranty Payable does the company owe?

Financial Accounting: The Impact on Decision Makers

10th Edition

ISBN:9781305654174

Author:Gary A. Porter, Curtis L. Norton

Publisher:Gary A. Porter, Curtis L. Norton

Chapter9: Current Liabilities, Contingencies, And The Time Value Of Money

Section: Chapter Questions

Problem 9.11E

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