Question - Journalizing liability transactions
The following transactions of Brooks Garrett occurred during 2014:
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. The attorney estimates the loss at $100,000.
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?