On October 10, 2010, Printfast Company sells a commercial printer for $2,350 with a one year warranty that covers parts. Warranty expense is project to be 4% of sales. On February 28, 2011, the printer requires repairs. The cost of the parts for the repair is $80 and Printfast pays their technician $150 to perform the repair. What is the warranty liability at the end of 2011

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Business

Itsy

31 August, 10:09

On October 10, 2010, Printfast Company sells a commercial printer for $2,350 with a one year warranty that covers parts. Warranty expense is project to be 4% of sales. On February 28, 2011, the printer requires repairs. The cost of the parts for the repair is $80 and Printfast pays their technician $150 to perform the repair. What is the warranty liability at the end of 2011

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Gael Parrish · Answer 1

At the end of 2011 The warrant laibility will be zero.

Explanation:

Printer cost 2,350

Warrant 4%

2,350 cx 4% = 84

Warrant expense 84

Warrant liability 84

Warrant Liability 84

Warrant expense 146

Inventory 80

Cash 150

First we use the warrant liablity account.

Then, because the actual warranty expenses were higher than our projected liability, additional warranty expenses should be recognize