Question

State Street​ Digital, Inc. starts the year with $ 3 comma 400 in its Estimated Warranty Payable account. During the​ year, there were $ 215 comma 000 in sales and $ 5 comma 300 in warranty repair payments. State Street Digital estimates warranty expense at 3​% of sales. The Warranty Expense for the year is​ ________.

Answer 1

The Warranty Expense for the year is $6,450

Step-by-step explanation:

The computation of the warranty expense for the year is shown below:

= Sales amount × estimated warranty expense percentage

= $215,000 × 3%

= $6,450

The other items which are given are related to the estimated warranty payable so, we do not consider these items in the computation part, as question has asked for warranty expense only. Hence, ignored it.