At the Beginning of 20X3,Shingles Roofing Had a Liability for Warranties

Essay

At the beginning of 20X3,Shingles Roofing had a liability for warranties of $7,000 on the books.During 20X3,Shingles Roofing had sales of $310,000.The company estimates that the cost of servicing products under warranty will average 2.5% of sales.Expenditures (all in cash)to satisfy warranty claims during 20X3 were $6,200,of which $2,500 was for products sold in 20X3.
a.Prepare the journal entries for sales revenue and the related warranty expense for 20X3.Assume
all sales are for cash.
b.Prepare the journal entry for the warranty expenditures.
c.Compute the December 31,20X3,ending balance in the Liability for Warranties account.