Question

Florida Keys Construction installs swimming pools. It calculates that warranty obligations are 3% of sales. For the year just ending, Florida Keys’ sales were $1,450,000. Previous quarterly entries debiting Warranty Expense totaled $28,700. Determine the estimated warranty expense for the year and make the journal entry necessary to bring the account to the needed balance.

Answer 1

Answer:

Dec. 31

Debit Warranty Expense 14,800

Credit Warranty Payable 14,800

Explanation:

Calculation to Determine the estimated warranty expense for the year

Based on the information given we were told that Florida Keys sales has the amount of $1,450,000 with 3% sales warranty obligation, and Florida keys as well had debit Warranty Expense of the amount of $28,700 this means that the Estimated warranty expense will be calculated as;

$1,450,000 * 3% =$43,500

$43,500-$28,700=$14,800

Therefore the Journal entry will be:

Dec. 31

Debit Warranty Expense 14,800

Credit Warranty Payable 14,800