Ecco Company sold $151,000 of kitchen appliances with six-month warranties during September. The cost to repair defects under the warranty is estimated at 9% of the sales price. On October 15, a customer required a $120 part replacement, plus $87 labor under the warranty.

Provide the journal entry (a) the estimated expense on September 30 and (b) the October 15 warranty work.

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andromache andromache · Answer 1 · 2020-04-20T06:12:03+02:00

Answer:

The journal entries are shown below

Explanation:

The journal entries are as follows

a. Product warranty expense $13,590 ($151,000 × 9%)

To Product warranty payable $13,590

(Being the warranty estimated expense is recorded)

b. Product warranty payable $207

To Supplies $120

To Wages payable $87

(Being the warranty work is recorded)

Only these two entries are passed

abiolataiwo2015 abiolataiwo2015 · Answer 2 · 2021-11-23T21:08:08+01:00

The appropriate journal entry to record the estimated expense on September 30 and the October 15 warranty work are:

a. Ecco Company journal entry

September 30

Debit Warranty expense $13,590

($151,000 × 9%)

Credit Warranty payable $13,590

(To record estimated expense)

b. September 30

Debit Warranty payable $207

($120+$87)

Credit Supplies $120

Credit Wages payable $87

(To record warranty work)

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