Kohl Co, provides warranties for many of its products. The January 1, 2019, balance of the Estimated Warranty Liability account

Question

1 month ago

7

Kohl Co, provides warranties for many of its products. The January 1, 2019, balance of the Estimated Warranty Liability account

was $42,635. Based on an analysis of warranty claims during the past several years, this year's warranty provision was established at 0.87% of sales. During 2019, the actual cost of servicing products under warranty was $26,750, and sales were $4.144,400
Required:
a. What amount of Warranty Expense will appear on Kohl Co.'s income statement for the year ended December 31, 2019?
Warranty Expense
Actual warranty expense Estimated warranty expense Warranty Expense
b. What amount will be reported in the Estimated Warranty Liability account on the December 31, 2019, balance sheet? (Amounts to be deducted should be indicated by minus sign.)
Estimated Warranty Liability, 1/1/19 balance
Estimated Warranty Liability 12/31/19 balance

Business

1 answer:

Nady [3.6K] · Answer 1 · 2026-03-23T10:59:47+03:00

The calculation is shown below; a. For Warranty Expense: Sales multiplied by Estimated Warranty Percentage% equals $4,144,400 × 0.87% = $36,056.28. b) The amount to be reported is as follows: Opening Balance of Estimated Warranty Liability as of Jan. 1, 2019 = $42,635, Less: Actual warranty costs in 2019 = ($26,750), Add: Warranty expense accrued in 2019 = $35,056, Closing Balance of Estimated Warranty Liability as of Dec. 31, 2019 = $50,941.