Product Warranty Liability To match revenues and expenses properly, warranty costs should be recognized as expense in the same period in which related revenues are recorded. Date Description Debit Cred Dec 31 Product Warranty Expense 3,000 Product Warranty Payable 3.000 Sales of $60, 000 with a 36-month warranty. Estimated average cost to repair defects is 5% Estimated warranty: $60,000 X 5%=$3,000 c10-6C10 - 6 Date Description Debit Credit Product Warranty Liability Product Warranty Expense 3,000 Product Warranty Payable 3,000 Estimated warranty: $60,000 x 5% = $3,000 Dec. 31 Sales of $60,000 with a 36-month warranty. Estimated average cost to repair defects is 5%. To match revenues and expenses properly, warranty costs should be recognized as expense in the same period in which related revenues are recorded