At January 1,2015,the Estimated Warranty Payable is $1,000.During 2015,the company recorded Warranty Expense of $17,500.During 2015,the company replaced defective products in accordance with product warranties at a cost of $10,000.What is the Estimated Warranty Payable at December 31,2015?

Question

Quizplus · Accepted Answer

The estimated warranty payable is calculated as follows:

Beginning balance (January 1, 2015) = $1,000 
Warranty expense recorded during 2015 = $17,500 
Cost of defective products replaced during 2015 = $10,000

Estimated warranty payable at December 31, 2015 = Beginning balance + Warranty expense - Cost of defective products 
= $1,000 + $17,500 - $10,000 
= $8,500

Therefore, the best choice is B, which represents the estimated warranty payable at December 31, 2015.

At January 1,2015,the Estimated Warranty Payable Is $1,000