During august, boxer company sells $356,000 in merchandise that has a one year warranty. experience shows that warranty expenses average about 5% of the selling price. the warranty liability account has a credit balance of $12,800 before adjustment. customers returned merchandise for warranty repairs during the month that used $9,400 in parts for repairs. the entry to record the estimated warranty expense for the month is:

The above answer can be explained as under -

The journal entry to record estimated warranty expense is -

Warranty Expense Dr. ............. $ 17,800

Estimated Warranty Liability .......... Cr. $ 17,800.

The estimated warranty liability is calculated on the basis of the credit sales of the year and percentage estimated. Here, the credit sales of the year is $ 356,000 and the estimated percentage is 5 % of credit sales. Thus, estimated warranty liability is = $ 356,000

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