Question

Hunter's Home Remodeling had cash sales for the month of May totaling $ 49 comma 000. Hunter offers a 1minusyear warranty on its construction services. If Hunter estimates warranty claims will equal 6​% of​ sales, what is the journal entry to record the estimated warranty expense for the​ month?

Answer 1

Journal Entry

Dr. Cr.

Cash $49,000

Sales $46,060

Warranty Payable $2,940

Step-by-step explanation:

Cash received against the sales with warranty is recorded into two parts the sales amount and warranty amount.

Total cash receipt = $49,000

Warranty = Total Sales x Warranty rate

Warranty = $49,000 x 6%

Warranty = $2,940

Sales value = $49,000 - $2,940 = $46,060