Assurance Warranty Journal Entries
Lesson:
An assurance warranty is included in an offering's price, at time of purchase.
Assuming that there will be a reasonably estimable value for the warranty's ultimate cost to the vendor, it must be booked at time of sale.
You're an accountant trying to figure out how to book some assurance warranty information on the balance sheet.
Here's what you know:
- The company was forced to incur costs of $113 in costs after a warranty claim.
- The company will pay for the related costs of the warranty claim in the future.
What journal entries should be added to the balance sheet?
Answer:
-
Warranty Claim with an Assurance Warranty Warranty Liability $113.00 Accounts Payable $113.00