During August, Boxer Company sells $353,000 in merchandise that has a one year warranty. Experience shows that warranty expenses average about 4% of the selling price. The warranty liability account has a credit balance of $11,500 before adjustment. Customers returned merchandise for warranty repairs during the month that used $8,100 in parts for repairs. The entry to record the estimated warranty expense for the month is: a) Debit Warranty Expense $10,720; credit Estimated Warranty Liability $10,720. b) Debit Estimated Warranty Liability $14,120; credit Warranty Expense $14,120. c) Debit Estimated Warranty Liability $8,100; credit Warranty Expense $8,100. d) Debit Warranty Expense $2,620; credit Estimated Warranty Liability $2,620.

Debit warranty expense $14,120 ; Credit estimated warranty liability $14,120

Explanation:

Per the above information, the journal entry to record the customer warranty expense for the month is;

Warranty expense Dr. $14,120

To estimated warranty liability Cr. $14,120

The estimated liability is computed on credit sales for the year and the estimated percentage.

Given that;

Credit sales for the year = $353,000

Estimated percentage of credit sales = 4%

Therefore,

Estimated warranty liability

= $353,00 × 4%

= $14,120

1) the stages a new product goes through from beginning to end, i.e., the stages that a product passes through from introduction through growth, maturity, and decline. 2) the time from initial research and development to the time at which sales and support of the product to customers are withdrawn. 3) the period of time during which a product can be produced and marketed profitably.

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