Chapter 11, Problem E11.21E

Accounting for warranty expense and warranty payable

The accounting records of Sculpted Ceramics included the following at January 1, 2018:

In the past, Sculpted’s warranty expense has been 9% of sales. During 2018, Sculpted made sales of $113,000 and paid $7,000 to satisfy warranty claims.

Requirements

1. Journalize Sculpted’s warranty expense and warranty payments during 2018. Explanations are not required.

2. What balance of Estimated Warranty Payable will Sculpted report on s balance sheet at December 31, 2018?