The accounting records of Prestige Auto Repair showed a balance of $6,700 in Estimated Warranty Payable at
Question:
The accounting records of Prestige Auto Repair showed a balance of $6,700 in Estimated Warranty Payable at December 31, 2015. In the past, Prestige Auto Repair's warranty expense has been 2 percent of sales. During 2016, Prestige Auto Repair made sales of $431,000 on account and paid $9,800 to satisfy warranty claims.
Requirements
1. Journalize Prestige Auto Repair's sales, warranty expense, and cash payments made to satisfy warranty claims during 2016. Explanations are not required. Ignore cost of goods sold.
2. What balance of Estimated Warranty Payable will Prestige Auto Repair report on its balance sheet at December 31, 2016? What amount of warranty expense will Prestige Auto Repair report on its income statement for the year ended December 31, 2016?
Balance SheetBalance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...
Step by Step Answer:
Req 1 Journal DATE ACCOUNTS POST Dr Cr REF 2016 Ac...View the full answer
