Freeze Company sells residential freezers for $ 2,150 each. The price includes a two-year warranty. During 2021, the company sells 550 freezers. On the basis of past experience, the warranty costs are estimated to be $ 160 per freezer. The actual warranty costs paid by Freeze during 2021 were $ 55,000.
Instructions
a) Prepare journal entries to record the estimated warranty expense and the warranty payments during 2021.
b) Assuming the liability has an unadjusted credit balance of $ 4,300, what is the 2021 adjusted liability balance?

Question

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The Answer of Freeze Company sells residential freezers for $ 2,150 each. The price includes a two-year warranty. During 2021, the company sells 550 freezers. On the basis of past experience, the warranty costs are estimated to be $ 160 per freezer. The actual warranty costs paid by Freeze during 2021 were $ 55,000.
Instructions
a) Prepare journal entries to record the estimated warranty expense and the warranty payments during 2021.
b) Assuming the liability has an unadjusted credit balance of $ 4,300, what is the 2021 adjusted liability balance?

Freeze Company Sells Residential Freezers for $ 2,150 Each