Nobreak Limited offers a 12-month warranty for the sale of used electric scooters. On Ap 2019, the beginning of the financial year, there was a credit balance of $280,000 in its Warranty Provision account. During the year ended 31 March 2020, Nobreak Limited incurred $260,000 in warranty costs, of which $120,000 was for parts and $140,000 for labour. (Assume that the labour costs originally had been debited to Wages Expense during the regular payroll run). At 31 March 2020, Nobreak Limited estimated its liability for unexpired warranty contracts as $300,000.
Required:
Prepare the necessary journal entries to record the warranty claims, assuming an annual accounting period.
