Gladiator

USA, a tire manufacturer, guarantees its tires against defects for five years or 60,000 miles, whichever comes first. Suppose

Gladiator

USA can expect warranty costs during the five-year period to add up to

5%

of sales. Assume that a

Gladiator

USA dealer in Denver, Colorado, made sales of

$473,000

during

2021.

Gladiator

USA received cash for

20%

of the sales and took notes receivable for the remainder. Payments to satisfy customer warranty claims totaled

$20,000

during

2021.

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requirements

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Part 1

1. Record the sales, warranty expense, and warranty payments for

Gladiator

USA. (Record debits first, then credits. Exclude explanations from any journal entries.)

First, let's record the sale of the tires.

Journal Entry AccountsDebitCredit Cash94,600 Notes Receivable378,400 Sales Revenue 473,000

Part 2

Now, let's accrue the warranty expense.

Journal Entry AccountsDebitCredit Warranty Expense23,650 Accrued Warranty Payable 23,650

Part 3

Next, we will record the payment of warranty expenses.

Journal Entry AccountsDebitCredit Accrued Warranty Payable20,000 Cash 20,000

Part 4

2. Post to the Accrued Warranty Payable T-account. The beginning balance was

$10,000.

At the end of

2021,

how much in accrued warranty payable does

Gladiator

USA owe to its customers?

Select the appropriate descriptions, and enter the beginning balance and post the entries to the Accrued Warranty Payable T-account. Calculate the balance of the liability account.

WHAT IS THE ENDING BALANCE