The accounting records of Gizmo Pty Ltd showed that at 1 January 2022, provision for warranty claims

Question:

The accounting records of Gizmo Pty Ltd showed that at 1 January 2022, provision for warranty claims was $7400, and for the year ended 31 December 2022, sales were $260 000. In the past, Gizmo’s warranty expense has been 9 per cent of sales and this rate is again expected for next year. During the current period, Gizmo paid $14 032 to satisfy warranty claims.

(i) What is Gizmo’s warranty expense for the year to 31 December 2022?

(ii) What is the closing balance of provision for warranty claims recorded on the balance sheet as at 31 December 2022?

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