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The journal entry a company uses to record the estimated product warranty liability expense is

A. debit Product Warranty Expense; credit Product Warranty Payable

B. debit Product Warranty Payable; credit Cash

C. debit Product Warranty Payable; credit Product Warranty Expense

D. debit Product Warranty Expense; credit Cash

Sagot :

The correct answer is A). debit Product Warranty Expense; credit Product Warranty Payable. A corporation makes a debit journal entry to record the projected product warranty liability expense. Cost of the product's warranty; credit Payable Product Warranty.

Debit the warranty expense account and credit the warranty liability account to accumulate the warranty expense. Debit the warranty liability account and credit the inventory account for the cost of the replacement items and parts shipped to consumers as actual warranty claims are received.

a liability account that details the anticipated cost for repairing or replacing a product within its warranty period. The amount of the liability is noted at the time of the sale. It's also when the spending is reported at that point.

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