The accounting records of Earthtone Ceramics included the following at
The accounting records of Earthtone Ceramics included the following at January 1, 2016:
In the past, Earthtone’s warranty expense has been 8% of sales. During 2016, Earthtone made sales of $175,000 and paid $9,000 to satisfy warranty claims.
Requirements
1. Journalize Earthtone’s warranty expense and warranty payments during 2016. Explanations are not required.
2. What balance of Estimated Warranty Payable will Earthtone report on its balance sheet at December 31, 2016?
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