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How much is the balance of the estimated liability

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Question - DEF Company grants a 3-year warranty on its products. The Estimated Liability for Product Warranty account has a beginning balance of P300,000. A review of the company's policy of accounting for warranties revealed that based on the company's past experience, warranty claims averaged 5% on net sales.

Gross sales P8,350,000

Sales returns and allowances 400,000

Cost of sales 4,790,000

The cost of sales included P500,000 cost of servicing the warranty claims for the year.

How much is the balance of the estimated liability for product warranty at the end of the year?

Reference no: EM132547227

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