Final answer:
To report warranty expense for November and December, one needs to examine the company's financial records and apply the historical percentage of sales resulting in warranty claims to the total sales of each respective month. The warranty expense would be recognized in the income statement under expenses.
Step-by-step explanation:
To determine how much warranty expense is reported for November and for December, one would typically examine the financial records that detail the costs associated with fulfilling warranty claims within those months. If the accounting method used by the company is based on an accrual basis, the company would estimate the warranty expenses for the products sold during these months and recognize the expense in the same period the related revenue is recognized, even if the actual expenditures occur at a later date. The formula for estimating warranty expenses is usually the historical percentage of sales that resulted in warranty claims.
An example calculation might look like this:
- Calculate the total sales for November and December.
- Find the percentage of historical sales that typically results in warranty claims.
- Apply this percentage to the total sales of the respective months to obtain the estimated warranty expense.
The actual reported warranty expense will be found in the company's monthly income statement under the expenses section. To provide a specific answer, one would need the actual sales numbers and the historical percentage used for warranty expense estimations.