What amount of warranty expense should be recorded in april

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Reference no: EM133346178

Question: Eawelaki Home Appliance Parts Lid. offers a six-month warranty on parts that the company has installed. This warranty ensures that parts are working as intended. The warranty covers the cost of parts, plus labour for repairs. Warranty costs are estimated to be 2.5% of sales for parts plus 1.5% of sales for labour. On 1 April, the warranty liability had a $22,400 credit balance. Warranty work in April consumed $13, 100 of parts and $16,200 of labour. Sales were equal to $805,000 in April.

Required:

1. What amount of warranty expense should be recorded in April?

2. What is the balance in the warranty provision at the end of April? Students may show calculations OR use the T-Account provided in the Answer Booklet.

Reference no: EM133346178

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