Question

Wall Welding Co. offers warranties on all products sold. Over the last several years, Wall’s warranty claims have approximated 3% of total sales. Wall’s currently has an Estimated Warranty Payable balance of $4,000, and sales for the year totaled $350,000. What is the amount of warranty expense recorded by Wall at year-end?

Answer 1

$10,500

Step-by-step explanation:

Wall Welding should record warranty expense based on experience with past claims (3% of total sales). So if total sales were $350,000 you multiply that by 3% = $10,500.

The $4,000 left in the estimated warranty payable account belongs to previous years and should not alter the current year calculations.