Alpha Company sells widgets for $25 each. The widget has a one year warranty. Alpha estimates that 6% of the widgets will require repair during the warranty period.
Alpha Company sells widgets for $25 each. The widget has a one year warranty. Alpha estimates that 6% of
the widgets will require repair during the warranty period. The estimated average repair cost is $4.25 per widget. On July 31, the Estimated Warranty Liability account had a normal balance of $10,000. During August, sales were $70,000. During August, 650 widgets were repaired under the warranty agreement with an actual cost of $4.50 each. Use this information to determine:
1. The August 31 Estimated Warranty Liability ending balance
2. The August Warranty Expense
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