Question

The balance of the Estimated Warranty Liability account was $13,050 on January 1, 2013. and $18,300 on December 31. 2013. Based on an analysis of warranty claims during the past several years this year's warranty provision was established at 1.5% of sales, and sales during the year were $1,410,000. What amount of warranty expense will appear on the income statement for the year ended December 31, 2013? Warranty expense $ 2,115.000 What were the actual costs of servicing products under warranty during the year?

Answer 1

Answer:

$21,150

$15,900

Explanation:

The computation of the warranty expense is shown below:

= Sales × given percentage

= $1,410,000 × 1.5%

= $21,150

The computation of the actual costs of servicing products under warranty during the year is shown below:

= Opening balance of estimated  Liability account  + warranty expense - ending balance of estimated  Liability account

= $13,050 + $21,150 - $18,300

= $15,900