What are the accounting entries for warranty deposit?

Warranty deposits, also known as quality assurance deposits, used to ensure the legitimate rights and interests of both parties, for the warranty deposits, generally accounted for with the projected liability account, the relevant accounting entries should be prepared how?

Accounting entries for warranty deposits

(1) Recognize projected liabilities related to product quality assurance:

Borrow: Cost of goods sold - product quality assurance

Credit: projected liabilities - product quality Guarantee

(2) incur product quality assurance costs (maintenance costs):

Borrow: projected liabilities - product quality assurance

Credit: bank deposits or raw materials, etc.

What does projected liabilities mean?

Projected liabilities refer to various projected liabilities recognized in accordance with relevant guidelines such as contingencies, including projected liabilities arising from the provision of guarantees to external parties, pending litigation, product quality assurance, restructuring obligations, and abandonment obligations for fixed assets and mineral interests.

The "projected liabilities" account belongs to the category of liabilities, generally reflecting the present obligations to be assumed by the enterprise in the future, and is used to account for the disposal costs incurred in the scrapping of fixed assets, the product quality guarantee deposits made after the sale of products, and the amount of outstanding litigation that may or is virtually certain to have to be compensated, etc. The "projected liabilities" account is a liability account, which reflects the present obligations to be assumed by the enterprise in the future.

Enterprises should review the book value of projected liabilities at the balance sheet date, and adjustments should be made if there is conclusive evidence that the book value does not truly reflect the current best estimate.

What are raw materials?

Raw materials refer to all kinds of raw materials and primary materials, auxiliary materials, packaging materials, fuel, repair spares, purchased semi-finished products, etc., which are processed to change their form or nature and constitute the main entity of the product during the production process, and are an important part of the enterprise's inventory.

"Raw materials" account belongs to the asset class account, the closing debit balance reflects the planned or actual cost of materials on hand. And should be in accordance with the location of the material storage (warehouse), material categories, varieties and specifications for detailed accounting.