Adjusting Entry for Estimated Warranty Repairs in Accounting

What is the adjusting entry for estimated warranty repairs at December 31, 20XX?

Based on the data provided, how can we calculate the adjusting entry for estimated warranty repairs at the end of the year?

Adjusting Entry Calculation:

The adjusting entry at December 31, 20XX for estimated warranty repairs can be calculated using the following steps:

1. Calculate Number of Scoreboards Needing Repair:

- 4% of scoreboards sold during the year = 200 * 4% = 8 scoreboards

2. Calculate Estimated Cost Per Scoreboard Repair:

- Average cost per scoreboard repair = $100

3. Calculate Total Estimated Warranty Repair Cost:

- Total estimated warranty repair cost = 8 scoreboards * $100 = $800

4. Determine the Adjusting Entry:

- Debit Warranty Expense for $800

- Credit Estimated Warranty Liability for $800

Therefore, the adjusting entry at December 31, 20XX for estimated warranty repairs would be:

- Debit Warranty Expense: $800

- Credit Estimated Warranty Liability: $800