Answer:
1.
April 30
No entry required
June 30,
DR Warranty Expense ................................................... $15,200
CR Estimated Warranty Payable....................................................$15,200
Working
Warranty Expense = 380,000 * 4%
= $15,200
Jul 28
DR Estimated Warranty Payable.......................................$5,900
CR Cash..................................................................................................$5,900
September 30
DR Loss from Lawsuit ..........................................................$ 70,000
CR Estimated Lawsuit Payable............................................................$70,000
December 31
DR Warranty Expense ..........................................................$20,000
CR Estimated Warranty Payable..........................................................$20,000
Working
Warranty Expense = 500,000 * 4%
= $20,000
2. Estimated Warranty Payable is a liability account so credits increase it and debits reduce it.
Balance;
= Credits - Debits
= 15,200 + 20,000 - 5,900
= $29,300
