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Dear Chris,
How are you?
I hope you are well and safe,In chapter 1 Kaplan textbook, page #9&10 its mentioned extracted trail balance for 31 march 2019 the following.
Warranty provision $90000 in the face of trail balance and in the notes it is mentioned the year end provision for warranty clains has been estimated at $75000.warranty costs are charged to administrative expense.
In the solution amount of $15000 has been deducted of administrative expenses.
Could you explain why? Use journal entries if possible please for establishing warranty provision and how can we deduct from the provision.Thanks in advance.
Hi,
The provision is already in the accounts from last year at $90,000 and we need to adjust it to its new value of $75,000. This is a movement of $15,000 from last year’s and a decrease in the provision.
Now that you have the background information, have a go at the double entry and see how you get on.
Thanks
Dear Chris,
I hope you are well and safe,
Could you tell me where is warranty accounting is covered,please?
I would like to do some revision around.Thank you in advance.
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