Intro Accounting Question: Calculating The Balance Of Estimated Warranty Liability …?

Hello:
I’m currently working on estimated (or uncertain) liabilities in my accounting course.
To help further understand this area of accounting, I’ve been doing some online practice questions. The problem is that when I get a question wrong, the program that I’m using doesn’t help me understand where I went wrong in my calculations. It simply tells me the correct answer.
With this said, I seem to be stuck. This is the problem that I was working on:
“SouthCo extends a lifetime warranty on all kettles sold. Using past experience, the company estimates that 3% of kettles sold will be returned and replaced at an average cost of $20 per kettle. On January 1, 2013, the balance in SouthCo’s Estimated Warranty Liability account was $9,000. During 2013, sales totaled $430,000 or 10,000 kettles. The actual number of kettles returned and replaced was 272.”
The first requirement was to prepare the journal entries for estimated warranty liabilities for units sold during 2013. Which I have done:
31/Dec
DR Warranty Expense 6,000
CR Estimated Warranty Liability 6,000
31/Dec
DR Estimated Warranty Liability 5,440
CR Merchandise Inventory 5,440
The second requirement was to calculate the balance in estimated warranty liability at December 31, 2013 and what warranty expense would appear as on the income statement.
**Balance of Estimated Warranty Liability at Dec. 31?
Warranty Expense as it appears on the Income Statement? 6,000
**The question I am unable to get correct is “Balance of Estimated Warranty Liability at Dec. 31?”
The correct answer should be $9,560 – but I have been unsuccessful in getting that answer and have tried multiple times. Any help/explanation on how to arrive at that answer would be greatly appreciated. (Everything else I understand and was marked as correct).
Thank you in advance!

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One Response to “Intro Accounting Question: Calculating The Balance Of Estimated Warranty Liability …?”

  1. JKRB says:

    Maybe you’re overthinking it.
    9,000 balance of estimated warranty liability on January 1
    + 6,000 warranty liability added for 2013
    – 5,440 actual warranty liability used for 2013
    = $9,560 estimated warranty balance on December 31, 2013

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