Kirk Co. sells goods to customers with a three-year warranty. During 2012, Kirk sold $500,000 of goods. On December 31, 2012, Kirk made the appropriate year-end adjustment to record the warranty expense related to the goods sold during the year. During 2013, Kirk paid $400 cash to satisfy warranty claims. Show the effects of the 2012 adjustment to record warranty expense.

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The Answer of Kirk Co. sells goods to customers with a three-year warranty. During 2012, Kirk sold $500,000 of goods. On December 31, 2012, Kirk made the appropriate year-end adjustment to record the warranty expense related to the goods sold during the year. During 2013, Kirk paid $400 cash to satisfy warranty claims. Show the effects of the 2012 adjustment to record warranty expense.

Kirk Co Sells Goods to Customers with a Three-Year Warranty