Question

The following transactions of Sandy Cruz occurred during 2018​: LOADING...​(Click the icon to view the​ transactions.)
Requirements
1. Journalize required​ transactions, if​ any, in Cruz​'s general journal. Explanations are not required.
2. What is the balance in Estimated Warranty Payable assuming a beginning balance of​ $0?
Requirement
1. Journalize required​ transactions, if​ any, in Cruz​'s general journal. Explanations are not required. ​(Record debits​ first, then credits. Exclude explanations from journal entries. For transactions that do not require an​ entry, make sure to select​ "No entry​ required" in the first cell in the​ "Accounts" column and leave all other cells​ blank.)
Apr.​ 30: Cruz is party to a patent infringement lawsuit of $ 220,000. Cruz​'s attorney is certain it is remote that Cruz will lose this lawsuit.
Jun. 30 Estimated warranty expense at 4% of sales of $360,000.
Jul. 28 Warranty claims paid in the amount of $6.400
Sep. 30 Cruz is party to a lawsuit for copyright violation of $150,000. Cruz's attorney advises that is probable Cruz will lose this lawsuit. The attorney estimates the loss at $150,000
Dec. 31 Cruz estimated warranty expense on sales for the second half of the year of $500,000 at Jun Choog Dec 31

Answer 1

Answer:

1.

April 30

No entry​ required

This is because Cruz​'s attorney is certain it is remote that Cruz will lose this lawsuit.

June 30

DR Warranty Expense $14,400

CR Warranty Liability $14,400

Working = 360,000 * 4%

= $14,400

July 28

DR Warranty Liability $6,400

CR Cash $6,400

September 30

DR Lawsuit Loss A/c $150,000

CR Lawsuit Loss Liability $150,000

December 21

DR Warranty Expense $20,000

DR Warranty Liability $20,000

Workings ( Original question says 4%.)

= 4% * 500,000

= $20,000

2. Balance on Estimated Warranty Liability Account

June 30 14,400

July 28 (6,400) -

Dec 21 20,000 +

= $28,000 Credit