Answer:
January 31.
Warranty Expense $18,000 (debit)
Warranty Provision $18,000 (credit)
June 20.
Warranty Provision $183 (debit)
Cash $183 (credit)
Explanation:
There is no option on the customer to take the warranty or not. There this type of Warranty is known as an <em>Assurance Type Warranty</em>.
Assurance type warranties are accounted in terms of the <em>Provision Standards</em> as follows ;
<u>Entry when the warranty is granted</u>
Warranty Expense $18,000 (debit)
Warranty Provision $18,000 (credit)
<em>Being recognition of warranty cost and provision. </em>
Warranty Expense $300,000 × 6% = $18,000
<u>When the Warranty Claim is subsequently received.</u>
Warranty Provision $183 (debit)
Cash $183 (credit)
<em>Being utilization of Provision when the warranty claim is received.</em>
