In concept, the estimating of Warranty Expense when products are sold under warranty is similar to the estimating of Bad Debts Expense based on credit sales.

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Both types of expenses involve estimating the amount of future losses that will occur based on historical data and experience. For warranty expense, this involves estimating the amount of future repairs or replacements that will be required under warranty. For bad debts expense, this involves estimating the amount of future uncollectible accounts based on past experience with customers who have not paid their debts.

In Concept, the Estimating of Warranty Expense When Products Are