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Zebra Corp. commenced operations on January 1, 2016. It estimates warranty expense as 1% of yearly sales. During June 2016 it satisfied warranty claims as follows:
|
Parts from inventory |
$2,000 |
|
Salaries paid in cash |
500 |
The 2016 warranty claims amounted to $22,000 (including the entry above) and 2016 sales revenue was $2 million.
Required:
- Record the June warranty claims of $2,500.
- Record the 2016 warranty expense.
- Calculate the balance in the estimated warranty liability account at December 31, 2016. Comment on your calculations.
Descriptions and general ledger account numbers are not necessary. Show calculations where applicable.
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