Trekster USA guarantees automobiles against defects for five years or 55,000 miles, whichever comes first. Suppose Trekster USA can expect warranty costs during the five-year period to add up to 6% of sales. Assume that Trekster USA dealer in Atlanta, Georgia, made sales of $483,000 during 2010. Trekster USA received cash for 30% of the sales and took notes receivable for the remainder. Payments to satisfy customer warranty claims totaled $19,000 during 2010.
1. Record the sales, warranty expense, and warranty payments for Trekster USA.
2. Post to the Estimated Warranty Payable T-account. The beginning balance was $11,000. At the end of 2010, how much in estimated warranty payable does Trekster USA owe to its customers?