Question

State Street​ Digital, Inc. starts the year with $ 2 comma 700 in its Estimated Warranty Payable account. During the​ year, there were $ 219 comma 000 in sales and $ 5 comma 000 in warranty repair payments. State Street Digital estimates warranty expense at 4 ​% of sales. The Warranty Expense for the year is​ ________.

Answer 1

Answer:

$8,760

Explanation:

The movement in the warranty payable account balance over a period is as a result of the additional warranty expenses payable due to sales and the amount paid as warranty expense during the period.

Given that State Street Digital estimates warranty expense at 4 ​% of sales, the Warranty Expense for the year

= 4% * $219,000

= $8,760