Ecco Company sold $145,000 of kitchen appliances with six-month warranties during September. The cost to repair defects under the warranty is estimated at 9% of the sales price. On October 15, a customer required a $100 part replacement, plus $86 labor under the warranty. Required:
Provide the journal entry for (a) the estimated expense on September 30 and (b) the & October 15 warranty work.

A. Dr Product warranty expense$13,050

Cr Product warranty payable $13,050

B. Dr Product warranty payable$186

Cr Supplies $100

Cr Wages payable $86

Explanation:

A. Preparation of the journal entry for the estimated expense on September 30

September 30

Dr Product warranty expense$13,050

Cr Product warranty payable $13,050

(145,000*9%)

(To record estimated expense)

B. Preparation of the journal entry for the October 15 warranty work.

October 15

Dr Product warranty payable$186

($100+$86)

Cr Supplies $100

Cr Wages payable $86

(To record warranty work)