During the month, Southeast Plumbing paid $600 to settle warranty claims. Southeast uses an estimated warranty account. The journal entry to record the payment would have been:

Question

Quizplus · Accepted Answer

The correct journal entry to record the payment of warranty claims when using an estimated warranty account is to debit the Estimated Warranty Payable account and credit Cash. This reflects the reduction in the liability for estimated warranties and the outflow of cash to settle the claims.

During the Month, Southeast Plumbing Paid $600 to Settle Warranty