On 30 June 2016,TV Manufacture Ltd,which uses accrual accounting,estimates that it will incur warranty costs of $135 000 in the next financial year on products sold during the year just ended.On 7 October 2016,the manufacturer pays $21 000 under the warranty.
-What is the journal entry made by TV Manufacture Ltd on 30 June 2016?

Question

Quizplus · Accepted Answer

The correct journal entry to record the estimated warranty expense is to debit Warranty Expense and credit Warranty Liability. This reflects the expected cost of warranty claims related to products sold during the year, in accordance with the accrual accounting principle.

On 30 June 2016,TV Manufacture Ltd,which Uses Accrual Accounting,estimates That