A Company Sells Its Product Subject to a Warranty That

question 18

Essay

A company sells its product subject to a warranty that covers the cost of parts for repairs during the six months after the date of sale.Warranty costs are estimated to be 5% of sales.During the month of July,the company performed warranty work and used $11,000 of parts to perform the warranty work.Sales for July were $450,000.
1.Record the warranty expense for the month of July.
2.Record the costs of the warranty work completed in June.
3.If the Estimated Warranty Liability account had a credit balance of $10,000 on May 31,what is the account balance at June 30?