Estimated Warranty Payable
Definition: Accrued liability for the estimated cost of honoring product warranties. When a product with a warranty is sold, the seller debits Warranty Expense…
Account #2200
TypeLiability
Normal Bal.Credit
FS LineBS
NotesAccrued liability for the estimated cost of honoring product warranties. When a product with a warranty is sold, the seller debits Warranty Expense and credits Estimated Warranty Payable based on historical warranty claim rates. When actual warranty work is performed, the payable is debited.
Related Subjects
Related
- Warranty ExpenseThe expense side of warranty accrual
- Warranty Liability Short-TermShort-term warranty obligation
External Links
- Warranty — Wikipedia