Sales for the current year amount to $900,000. The company estimates warranty expense to be 5% of sales. The journal entry to accrue the estimated warranty expense includes a debit to estimated warranty payable for $45,000.

Question

Quizplus · Accepted Answer

The correct journal entry to accrue the estimated warranty expense includes a debit to Warranty Expense for $45,000 (5% of $900,000) and a credit to Estimated Warranty Liability for $45,000, not a debit to Estimated Warranty Payable.

Sales for the Current Year Amount to $900,000