The journal entry to record the cost of warranty repairs that were incurred during the current period, but related to sales made in prior years, includes a debit to Warranty Expense.

Question

Quizplus · Accepted Answer

The correct journal entry to record the cost of warranty repairs incurred during the current period for sales made in prior years would include a debit to a liability account (such as Warranty Liability or Accrued Warranty Cost) rather than a debit to Warranty Expense, as the expense was recognized in the period the sale was made, in accordance with the matching principle.

The Journal Entry to Record the Cost of Warranty Repairs