Reference no: EM132873728

Question - A company sells its product subject to a warranty that covers the cost of parts for repairs during the six months after the date of sale. Warranty costs are estimated to be 3% of sales. Sales for April were $800,000. During the month of June, the company performed warranty work and used $7,000 worth of labor and $2,000 of parts to perform the warranty work. The company uses the assurance type warranty, accrual approach.

1. Record the warranty expense for the month of April.

2. Record the costs of the warranty work completed in June.