Chapter 11, Problem 12RQ

To determine

Warranty expenses:

Warranty expense is related to the seller’s commitment at the time of sale to repair or replace a product for a specified period of time. The matching principle requires that warranty expenses need to be booked in the same period when the sale is recorded. So the warranty liability or warranty payable account is created which reports the estimated amount the company needs to spend on the replacement or repair of the product. Warranty expense is a part of selling an distribution expenses of the business.

To explain:

The situation, when the warranty expenses are recorded by the business and the reasons for the same.