Question

The following transactions of Samuel James oocurred during 2018 (Click the icon to view the transactions.) Requirements 1. Jounalize required transactions, if any, in James's general jounal. Explanations are not required. What is the balance in Estimated Warranty Payable assuming a beginning balance of $0? 2. Requirement 1. Journalize required transactions, if any, in James's general journal. Explanations are not required. (Record debits first, then credits. Exclude explanations from journal entries. For transactions that do not require an entry, make sure to select "No entry required" in the first cell in the "Accountscoume and leaun al.otber.cosank Apr. 30: James is party to a patent infringement lawsuit of $200,000. James's attomey is certain it is More Info Credit Debit Date Accounts Apr 30 Арг. 30 James is party to a patent infringement lawsuit of $200,000. James's attomey is certain it is remote that James will lose this lawsuit Jun. 30 Estimated warranty expense at 2% of sales of $430,000. Warranty claims paid in the amount of $5,700 Jul. 28 Sep. 30 James is party to a lawsuit for copyright violation of $150,000. James's attomey advises that it is probable James will lose this lawsuit. The attomey estimates the loss at $150,000 James estimated warranty expense on sales for the second half of the year of $480,000 at 2 % Dec. 31 Print Done

Answer 1

Date	Accounts	Debit	Credit
	No entry
In this case attorney is certain that company would not lose the lawsuit and thus there is no need for provision. This would be only disclosed in the notes to account.
Date	Accounts	Debit	Credit
30-Jun	Warranty expense (430000*2%)	$8,600
	Estimated warranty payable		$8,600
	(To record estimated warranty expense)
Warranty being expense is debited for increase in balance, estimated warranty is liability for business and thus credited for increase in balance.
Date	Accounts	Debit	Credit
28-Jul	Estimated warranty payable (430000*2%)	$5,700
	Cash		$5,700
	(To record warranty claims paid)
Warranty claim paid would decrease liability and thus warranty payable is debited for decrease. In case of cash there would be cash outflow and thus cash is credited for decrease.
Date	Accounts	Debit	Credit
30-Sep	Loss on copyright violation	$150,000
	Provision for copyright violation		$150,000
	(To record provision for copyright violation)
Attorney is certain that lawsuit would be lost and thus company will have to create provision for same.
Loss on ccopyright violation is expense which is debited for increase and provision is liability which is credited for decrease.
Date	Accounts	Debit	Credit
31-Dec	Estimated warranty payable (480000*2%)	$9,600
	Cash		$9,600
	(To record warranty claims paid)
Warranty claim paid would decrease liability and thus warranty payable is debited for decrease. In case of cash there would be cash outflow and thus cash is credited for decrease.