Warranties
Illustrative Entries
| XX-XX-XX |
Cash |
1,000,000 |
||
| Sales |
1,000,000 |
|||
| To record sales |
| XX-XX-XX |
Warranty Expense |
30,000 |
||
| Warranty Liability |
30,000 |
|||
| To record estimated warranty cost equal to 3% of sales ($1,000,000 X 3%) |
| XX-XX-XX | Warranty Liability |
5,000 |
||
| Cash |
5,000 |
|||
| Repaired defective products under warranty at a cost of $5,000 |