44.4k views
3 votes
During june, vixen company sells $850,000 in merchandise that has a one year warranty. experience shows that warranty expenses average about 3% of the selling price. customers returned $14,000 of merchandise for warranty replacement during the month. the entry to record the estimated warranty provision at the end of the month is:

User Ganzux
by
7.9k points

1 Answer

0 votes

Answer:

Step-by-step explanation:

The journal entry is shown below:

Warranty expense A/c Dr $25,500

To Estimated warranty liability $25,500

(Being the estimated warranty provision is recorded)

The computation is shown below:

= Merchandise sale value × given percentage

= $850,000 × 3%

= $25,500

Simply we debited the warranty expense and credited the estimated warranty liability so that the correct posting can be done.

User Acosta
by
7.8k points
Welcome to QAmmunity.org, where you can ask questions and receive answers from other members of our community.