The beginning balance in the Warranty Payable account was $50,000. Sales were $900,000 and warranty costs were estimated at 7% of sales. During the year, $55,000 was paid to settle warranty claims. As a result of these transactions, what is the amount of warranty expense for the year and what is the ending balance in Warranty Payable?
Calculations: Warranty expense for year = 900,000 (Sales * .07 (Warranty estimate) = 63,000 Warranty payable = 50,000 (Beginning balance) + 63,000 (Warranty expense) - 55,000 (Warranty claims paid) = 58,000 (Ending balance)