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23 October, 08:19

Quantas Industries sold $325,000 of consumer electronics during July under a nine-month warranty. The cost to repair defects under the warranty is estimated at 4.5% of the sales price. On November 11, a customer was given $220 cash under terms of the warranty. Provide the journal entry for the estimated warranty expense on July 31 for July sales. Provide the journal entry for the November 11 cash payment.

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  1. 23 October, 11:20
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    Explanation:Estimated warranty journal entry

    4.5% of sales is the estimated warranty on sales for the month of July.

    4.5% of $325,000 = $14,625

    Journal Entry:

    DR: Warranty Expense. $14,625

    CR: Warranty payable. $14, 625

    Being warranty estimated for the month of July.

    B. Journal Entry for the Nov 11 cash payment.

    DR: Warranty payable. $220

    CR : Cash. $220

    Being cash payment on product warranty sold in July
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