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During 2020, Ward Company introduced a new product carrying a two-year warranty against defects, which is included in the selling price of the product. The
During 2020, Ward Company introduced a new product carrying a two-year warranty against defects, which is included in the selling price of the product. The estimated warranty costs are 2% of sales within the first 12 months following the sale and 4% in the second 12 months following the sale. Sales and actual warranty expenditures for the years ended December 31, 2020, and 2021 are: EXP Sales 2020 $1,200,000 2021 2,000,000 $3,200,000 Actual Warranty Expenditures $18,000 60,000 $78,000 a. At December 31, 2020, what would Ward report as estimated warranty liability on its balance sheet? $ 0 b. Record the journal entries on December 31, 2020. Date Account Name Dr. Dec. 31, 2020 Cr. To accrue for warranty expense ooO Dec 31, 2020 To record actual warranty costs C. At December 31, 2021, what would Ward report as estimated warranty liability on its balance sheet? $ 0 d. Record the journal entries required on December 31, 2021. Date Account Name Dr. Dec 31, 2021 To accrue for warranty expense Dec 31, 2021 To record actual warranty costs
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