A Company's Estimated Warranty Liability Account Balance Calculation
What should be the Estimated Warranty Liability account balance as of June 30?
The account balance of Estimated Warranty Liability account as of June 30 should be $22,470. Warranty costs are estimated to be 3.5% of sales for parts and 1.25% of sales for labor. The sales for June amounted to $452,000. During June, the company performed warranty work and used $8,000 worth of parts and paid $2,000 in wages for labor to do the warranty work.