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18 February, 10:56

In the current year, Hanna Company reported quality-assurance warranty expense of $ 189,000 and the warranty liability account increased by $ 27,000. What were warranty expenditures during the year?

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  1. 18 February, 11:49
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    warranty expenditures during the year = $162,000

    Explanation:

    Warranty expenditure during the year = quality assurance warranty expenses - increase in the warrant liability account

    = 189,000 - 27,000

    = $162,000.

    This expenditure reported in Hanna's income statement for the current year.

    The adjusting journal entry is debit to the warranty expenses account and credit to the estimated warranty liability account.
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