Journalizing liability transactions
The following transactions of Brooks Garrett occurred during 2012:
|
Apr |
30 |
Garrett is party to a patent infringement lawsuit of $200,000. Garrett’s attorney is certain it is remote that Garrett will lose this lawsuit. |
|
Jun |
30 |
Estimated warranty expense at 2% of sales of $400,000. |
|
Jul |
28 |
Warranty claims paid in the amount of $6,000. |
|
Sep |
30 |
Garrett is party to a lawsuit for copyright violation of $100,000. Garrett’s attorney advises that it is probable Garrett will lose this lawsuit. |
|
Dec |
31 |
Garrett estimates warranty expense on sales for the second half of the year of $500,000 at 2%. |
Requirements
1. Journalize required transactions, if any, in Garrett’s general journal. Explanations are not required.
2. What is the balance in Estimated warranty payable?