Question

In the current year, Hanna Company reported quality-assurance warranty expense of $ 189,000 and the warranty liability account increased by $ 27,000. What were warranty expenditures during the year?

Answer 1

Answer:

warranty expenditures during the year= $162,000

Explanation:

Warranty expenditure during the year = quality assurance warranty expenses - increase in the warrant liability account

= 189,000 - 27,000

= $162,000.

This expenditure reported in Hanna's income statement for the current year.

The adjusting journal entry is debit to the warranty expenses account and credit to the estimated warranty liability account.

Answer 2

Answer:

$162,000

Explanation:

Remember Hanna reported warranty expenses after summing both liabilities and expenditures of the year.

We know what the value of expenditures are by subtracting the liability increase;

$ 189,000 - $ 27,000 = $162,000