The accounting records of Earthtone Ceramics included the following at December 31, 2011:

In the past, Earthtone’s warranty expense has been 5% of sales. During 2012, Earthtone made sales of \($115,000\) and paid \($4,000\) to satisfy warranty claims.
Requirements
1. Journalize Earthtone’s warranty expense and warranty payments during 2012. Explanations are not required.
2. What balance of Estimated warranty payable will Earthtone report on its balance sheet at December 31, 2012?

Transcribed Image Text:

Estimated warranty payable Beginning balance 3,000