Solution-What should be the account balance as of June

What should be the account balance as of June

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Reference no: EM133030601

Problem - A company sells its product subject to a warranty that covers the cost of parts and labour for repairs during the six months after sale.

Warranty costs are estimated to be 3.5% of sales for parts, and 1.5% of sales for labour.

During the month of June, the company performed warranty work and used $8,000 worth of parts and paid $4,000 in wages for labour to do the warranty work.

Sales for June amounted to $450,000.

Required -

a) What account should be debited for the $4,000 in labour?

b) What should be the amount of estimated warranty expense for June?

c) If the Warranty Liability account had a $10,000 credit balance on May 31, what should be the account balance as of June 30?

Reference no: EM133030601

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What should be the account balance as of June

Reference no: EM133030601

Reference no: EM133030601

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