1.1 Below is the journal entry:-
a. Cash Dr, $5,400
To Sales $5,400
(Recording sales transaction)
b. Warranty Expense Dr, $330
Estimated Warranty Liability $330
(Recording recognized warranty expense)
($5,500 × 6%)
c. Estimated Warranty Liability Dr, $435
To Inventory $435
(Recording warranty execution)
(29 razors × $15)
d. Cash Dr, $16,200
To Sales $16,200
(Recording sales transaction)
e. Estimated Warranty Liability Dr, $360
To Inventory $360
(Recording warranty execution)
(24 × $15)
f. Warranty Expense Dr, $972
To Estimated Warranty Liability $972
(Recording recognized warranty expense)
($16,200 × 6%)
2. The amount of warranty expense for November 2016 and December 2016 is as follows:-
Warranty Expense for Nov 2016 = $5,500 × 6%
= $330
Warranty Expense for Dec 2016 = $16,200 × 6%
= $972
3. The warranty expense for January 2017 is computed as follows:-
Warranty Expense for Jan 2017 =$10,800 × 6%
=$648
4. The balance of the Estimated Warranty Liability account on December 31, 2016 is calculated as:-
Balance of Estimated Warranty Liability on 31 Dec 2016 = Warranty Liability for Nov 2016 + Warranty Liability for Dec 2016 - Warranty Claim in Dec 2016
=$330 + $972 - $648
=$654
5. The balance of the Estimated Warranty Liability account on January 31, 2017 is calculated as:-
Balance of Estimated Warranty Liability on 31st Jan 2017 = Balance on 31 Dec 2016 + Warranty Liability for Jan 2017 - Warranty Claim in Jan 2017
=$654 + $648 - (29 × $15)
=$654 + $648 - $435
=$867
