Question

Accrued Product Warranty

Logan Manufacturing Co. warrants its products for one year. The estimated product warranty is 5% of sales. Assume that sales were $409,000 for January. In February, a customer received warranty repairs requiring $150 of parts and $75 of labor.

a. Journalize the adjusting entry required at January 31, the end of the first month of the current fiscal year, to record the accrued product warranty. If an amount box does not require an entry, leave it blank.

	Product Warranty Expense	fill in the blank 7f8224f72026016_2	fill in the blank 7f8224f72026016_3
	Product Warranty Payable	fill in the blank 7f8224f72026016_5	fill in the blank 7f8224f72026016_6

Feedback

The accrued product warranty amount is recorded in the same period in which the sale is recorded, therefore following the matching concept.

b. Journalize the entry to record the warranty work provided in February. If an amount box does not require an entry, leave it blank.

	Product Warranty Payable	fill in the blank f0e8380b3ffafcd_2	fill in the blank f0e8380b3ffafcd_3
	Supplies	fill in the blank f0e8380b3ffafcd_5	fill in the blank f0e8380b3ffafcd_6
	Wages Payable	fill in the blank f0e8380b3ffafcd_8	fill in the blank f0e8380b3ffafcd_9

Answer 1

a. Journalize the adjusting entry required at January 31, the end of the first month of the current fiscal year, to record the accrued product warranty. If an amount box does not require an entry, leave it blank.

	Product Warranty Expense (409000*5%)	20450
	Product Warranty Payable		20450

b. Journalize the entry to record the warranty work provided in February. If an amount box does not require an entry, leave it blank.

	Product Warranty Payable	225
	Supplies		150
	Wages Payable		75