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20 February, 17:22

Jones Company's balance reflected Estimated Warranty Payable of $1,000 credit at the end of 2018, the current year. During 2019, the following year, Jones had sales of $100,000 and expects product warranties to cost the company 9% of sales. During 2019, Jones paid $8,500 for warranties. What is Jones Estimated Warranty Payable balance at the end of 2019?

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  1. 20 February, 18:27
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    Answer: $1,500 credit balance

    Explanation:From the question above, Jones company had a warranty payable balance of $1,000 carried forward from 2018.

    During the year 2019, total sales was $100,00 with 9% warranty cost on sales valued at $100,000 @ 9% = $9000.

    During the year a total of $8,500 was paid out of the $9,000 leaving a balance of $500.

    At the end of the year 2019, Jones company will have $1,500 payable warranty balance in its books.
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