Question

Fosters Manufacturing Co. warrants its products for one year. The estimated product warranty is 2% of sales. Assume that sales were $1,500,000 for January. On February 7, a customer received warranty repairs requiring $325 of parts and $120 of labor.

Required:
a. Journalize the adjusting entry required at January 31, the end of the first month of the current of current fiscal year, to record the accrued product warranty.
b. Journalize the entry to record the warranty work provided in February.

Answer 1

Answer: Please see answer in explanation column

Step-by-step explanation:

a)Account titles and explanation Debit Credit

Warranty Expense $30,000

Warranty Payable $30,000

Calculation :

2 % x $1,500,000 =$30,000

b) Account titles and explanation Debit Credit

Warranty Provision $445

Materials $325

Salaries Payable $120