A company has a selling price of $2,000 each for its printers. Each printer has a 2 year warranty that covers replacement of defective parts. It is estimated that 3% of all printers sold will be returned under the warranty at an average cost of $154 each. During November, the company sold 34,000 printers, and 440 printers were serviced under the warranty at a total cost of $59,000. The balance in the Estimated Warranty Liability account at November 1 was $31,000. What is the company's warranty expense for the month of November?

Question

Business

Evie Green

14 August, 05:48

A company has a selling price of $2,000 each for its printers. Each printer has a 2 year warranty that covers replacement of defective parts. It is estimated that 3% of all printers sold will be returned under the warranty at an average cost of $154 each. During November, the company sold 34,000 printers, and 440 printers were serviced under the warranty at a total cost of $59,000. The balance in the Estimated Warranty Liability account at November 1 was $31,000. What is the company's warranty expense for the month of November?

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Christian Morrow · Answer 1

Answer:The company's warranty expense for the month of November is $157,080.

Explanation:

When the estimated amount is recognized-

Warranties expense A/c (Dr.) = $157,080

Estimated Warranty Liability (Cr.) = $157,080

When the repairs are actually paid, Estimated Warranty Liability will be Debited and Cash will be credited. so, The company's warranty expense for the month of November is $157,080.

i. e. (34,000 * 3% * $154 = $157,080)