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16 November, 19:41

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?

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  1. 16 November, 22:37
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    Journal Entry

    Dr. Cr.

    Cash $49,000

    Sales $46,060

    Warranty Payable $2,940

    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
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