What is the journal entry for recording warranty claims paid?
When a product is sold that has a warranty attached, the company records the warranty expense and warranty liability in the same period. There is no cash outflow when the initial warranty liability is recorded. The cash outflow typically occurs at a later date.
When the cash outflow occurs, the debit is to accrued warranty and the credit is to cash. There is no income statement impact when the warranty claim is paid.
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