Aqua Construction installs swimming pools. It calculates that warranty obligations are 5% of sales. For the year just ending, Aquas sales were $1,500,000. Previous quarterly entries debiting Warranty Expense totaled $48,700.

Required:

Determine the estimated warranty expense for the year and make the journal entry necessary to bring the account to the needed balance. Refer to the Chart of Accounts for exact wording of account titles.

CHART OF ACCOUNTS

Aqua Construction

General Ledger

	ASSETS
110	Cash
111	Accounts Receivable
112	Interest Receivable
113	Notes Receivable
115	Merchandise Inventory
116	Supplies
118	Prepaid Insurance
120	Land
123	Building
124	Accumulated Depreciation-Building
125	Office Equipment
126	Accumulated Depreciation-Office Equipment

	LIABILITIES
210	Accounts Payable
213	Interest Payable
214	Notes Payable
221	Salaries Payable
222	Social Security Tax Payable
223	Medicare Tax Payable
224	Federal Withholding Tax Payable
225	State Withholding Tax Payable
226	Federal Unemployment Tax Payable
227	State Unemployment Tax Payable
228	State Disability Insurance
231	Medical Insurance Payable
232	Retirement Savings Deductions Payable
233	Union Dues Payable
234	Vacation Pay Payable
235	Unfunded Pension Liability
241	Warranty Payable

	EQUITY
310	Common Stock
311	Retained Earnings
312	Dividends
313	Income Summary

General Journal Determine the estimated warranty expense for the year and make the journal entry necessary to bring the account to the needed balance on December 31. Refer to the Chart of Accounts for exact wording of account titles. PAGE 1 JOURNAL DATE DESCRIPTION POST. REF. DEBIT CREDIT