Question

A company has a selling price of $1,500 each for its printers. Each printer has a 2 year warranty that covers replacement of defective parts. It is estimated that 3% of all printers sold will be returned under the warranty at an average cost of $144 each. During November, the company sold 24,000 printers, and 340 printers were serviced under the warranty at a total cost of $47,000. The balance in the Estimated Warranty Liability account at November 1 was $26,000. What is the company's warranty expense for the month of November?

Answer 1

Answer:

$103,680

Explanation:

estimated warrant liablity 3% of unid sold at $144

24,000 x 3% x 144 = $103,680

This will be the expected warranty laiblity for the sales of the period, and also the warranty expense.

warranty expense 103,680

warranty liability               103,680

warranty liability    47,000

   inventory                          47,000

to record warranty services

(we use inventory because the company use replacement part, those par are represented in inventory account)

Warrant liablity account

beginning balance 26,000

warranty expense  103,680

warrant serviced    (47,000)

ending balance       82,680