Chapter 11, Problem E11.21E

To determine

Concept Introduction:

Warranty Expense and Estimated Warranty Payable:

Warranty Expense refers to the cost which a business expects to incur or has already incurred for the repair or replacement of the goods sold.

Warranty Expense is calculated by using the following formula –

$WarrantyExpense=SalesXEstimatedwarrantypayable\left(rateofsales\right)$

Requirement 1

To prepare

Journal entry to record warranty expense and warranty payments.

To determine

Requirement 2

The balance of estimated warranty payable on December 31, 2016.