Ridge Runner Corrector guarantees its snowmobiles for three years. Company experience indicates that warranty costs will be approximately 4 % of sales.

Assume that the Ridge Runner dealer in Colorado Springs made sales totaling $450,000 during 2016. The company received cash for 10% of the sales and notes receivable for the remainder. Warranty payments totaled $12,000 during 2016.

Requirements

1.

Record the sales, warranty expense, and warranty payments for the company. Ignore cost of goods sold.

2.

Post to the Estimated Warranty Payable T-account. At the end of2016,

how much in Estimated Warranty Payable does the company owe? Assume the Estimated Warranty Payable is $0 on January 1,2016

1.

Record the sales, warranty expense, and warranty payments for the company. Ignore cost of goods sold.

2.

Post to the Estimated Warranty Payable T-account. At the end of2016,

how much in Estimated Warranty Payable does the company owe? Assume the Estimated Warranty Payable is $0 on January 1,2016

 



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