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CaHeK987 [17]
1 year ago
6

Mark Sports Inc. sold 500 pairs of skates at $50 each in 2012. The management estimates that 4% of the skates sold will need rep

air within a year. The repair cost for each pair is $10. Which is the correct journal entry for estimating warranty liability
Business
1 answer:
In-s [12.5K]1 year ago
7 0

Answer:

Warranty repair Expense (Dr.) $200

Warranty Payable (Dr.) $200

Explanation:

The warranty expense is the estimate of probable expense that will incur due to fault in the product. The estimated repair is the 4% of skates sold. If 500 pairs of skates are sold then out of them 4% will require repair. The repair for the faulty skates will cost $10. The total cost will be $200,

500 pairs of skates * 4% * $10

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