# Homework 7, Question #6

Alpha Company sells widgets for \$20 each. The widget has a one year warranty. Alpha estimates that 6% of the widgets will require repair during the warranty period. The estimated average repair cost is \$4.30 per widget. On July 31, the Estimated Warranty Liability account had a normal balance of \$15,000. During August, sales were \$70,000. During August, 550 widgets were repaired under the warranty agreement with an actual cost of \$4.50 each. Use this information to determine:1. The August 31 Estimated Warranty Liability ending balance2. The August Warranty Expense I feel like maybe I am overthinking this question, here is what I have so far: 550 widget x \$4.50= \$2,475 is the August warranty expense,000 (Warranty Liability Account) – \$2,475 (August Expense)= \$12,525 August 31 Estimated Warranty Liability ending balanceDo I have my calculations correct, or am I missing something?

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