if expense due to warranty claim is 2000 and the delivery charges to deliver to the customer is 100 rs
so what are the journal entries
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If expense due to warranty claim
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| Here are the journal entries for warranty claim expenses: 1. When Warranty Claim is Recognised (Provision at time of sale, if provision method is followed): Dr. Warranty Expense A/c Rs. 2,000 Cr. Provision for Warranty A/c Rs. 2,000 2. When Actual Warranty Repair is Carried Out (utilising the provision): Dr. Provision for Warranty A/c Rs. 2,000 Cr. Materials Used / Labour A/c Rs. 2,000 (or Cr. Cash/Creditor if third-party repair) 3. If No Provision was Made Earlier (Direct expense method): Dr. Warranty Expense A/c Rs. 2,000 Cr. Cash / Creditor A/c Rs. 2,000 4. Delivery Charges to Return Product to Customer: Dr. Warranty / Delivery Expense A/c Rs. 100 Cr. Cash / Courier Payable A/c Rs. 100 5. Combined Entry (if treating all warranty-related costs together): Dr. Warranty Expense A/c Rs. 2,100 Cr. Cash / Creditor A/c Rs. 2,100 (being warranty repair cost Rs. 2,000 + delivery Rs. 100) Note: Under Ind AS 37, warranties that are part of the original sale must be recognised as a provision at the time of sale based on estimated liability. The actual costs are then charged against this provision when incurred. |
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