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Question(s) / Instruction(s):

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 6% of sales. During the month of June, the company performed warranty work and used $12,000 of parts to perform the warranty work. Sales for June were $450,000.

Required:

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

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

3. If the Estimated Warranty Liability account had a credit balance of $10,000 on May 31, what is the account balance at June 30? 

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