Estimated Liabilities: Warranties Video Lessons

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Problem: Evenflo Corporation had a balance in the Estimated Warranty Payable on January 1, 2004 of $30,000. During 2004, sales were $1,500,000 and warranty costs were estimated at 5% of sales. During the year, $90,000 was paid out to settle warranty claims. What is the ending balance as of December 31, 2004 in the Estimated Warranty Payable account? a. $15,000 Debit Balance b. $45,000 Debit Balance c. $15,000 Credit Balance d. $45,000 Credit Balance

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Problem Details

Evenflo Corporation had a balance in the Estimated Warranty Payable on January 1, 2004 of $30,000. During 2004, sales were $1,500,000 and warranty costs were estimated at 5% of sales. During the year, $90,000 was paid out to settle warranty claims. What is the ending balance as of December 31, 2004 in the Estimated Warranty Payable account?

a. $15,000 Debit Balance

b. $45,000 Debit Balance

c. $15,000 Credit Balance

d. $45,000 Credit Balance

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