Question

Fosters Manufacturing Co. warrants its products for one year. The estimated product warranty is 4% of sales. Assume that sales were $280,000 for January. On February 7, a customer received warranty repairs requiring $180 of parts and $105 of labor.a. Journalize the adjusting entry required at January 31, the end of the first month of the current fiscal year, to record the accrued product warranty. b. Journalize the entry to record the warranty work provided in February.

Answer 1

Step-by-step explanation:

a. Journalize the adjusting entry required at January 31, the end of the first month of the current fiscal year, to record the accrued product warranty.

Debit: Product Warranty expense Account = $280,000 × 4% = $11200

Credit Product Warranty payable = $11200

b. Journalize the entry to record the warranty work provided in February.

Debit Product warranty payable Account $285

Credit Supplies account $180

Credit Wages payable account $105