The accounting records of Osgood Carpets showed a balance of $3,000 in Estimated Warranty Payable at December 31, 2013. In the past, Osgood’s warranty expense has been 5% of sales. During 2014, Osgood made sales of $300,000 on account and paid $12,000 to satisfy warranty claims.

Requirements

1. Journalize Osgood’s sales, warranty expense, and cash payments made to satisfy warranty claims during 2014. Explanations are not required.

2. What balance of Estimated Warranty Payable will Osgood report on its balance sheet at December 31, 2014?