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sweet [91]
3 years ago
13

Maas, Inc., sells washers and dryers that include a maximum one-year warranty covering parts. Past experience shows that warrant

y expense averages about 2 percent of the selling price of each washer and dryer. Net sales totaled $400,000 during the year ending December 31. Prepare the December 31 adjusting entry for Maas by selecting the account names from the drop-down menus and entering the dollar amounts in the debit or credit columns.
Business
1 answer:
Assoli18 [71]3 years ago
3 0

Answer:

See explanation section

Explanation:

Journal entry to be recorded -

<em>Debit    Warranty expense          $8,000</em>

<em>Credit   Estimated warranty liability         $8,000</em>

Calculation:

Net sales = $400,000

warranty expenses = 2% of the net selling price.

Therefore, estimated warranty expense = $400,000 × 2% = $8,000

Since, the company does not pay the expenses, a liability arises. Since we are estimating the value from past experience, the liability will be estimated.

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Answer:

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