During August, Boxer Company sells $359,000 in merchandise that has a one year warranty. Experience shows that warranty expenses average about 5% of the selling price. The warranty liability account has a credit balance of $13,100 before adjustment. Customers returned merchandise for warranty repairs during the month that used $9,700 in parts for repairs. The entry to record the customer warranty repairs is:

Dr Estimated Warranty Liability $9,700

Cr Parts Inventory $9,700.

Explanation:

Preparation of the entry to record the customer warranty repairs

Based on the information given we were told that Customers had to returned the merchandise for warranty repairs in which the amount of $9,700 was used in parts for repairs this means the journal entry to record the customer warranty repairs will be:

Dr Estimated Warranty Liability $9,700

Cr Parts Inventory $9,700.

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