Chapter 11, Problem 11.5E

(a)

To determine

Journal Entries: Entries to record the financial transactions during each accounting period are called journal entries. Income, liabilities and the giver are credited if the balance is increased and debited if the balance is reduced Expenses, assets and the receiver are debited if the balance is increased and credited if the balance is reduced in a journal entry.

Warranty Liability: Contingent liability due to defect in the products of the company is called warranty liability. Estimated on historical basis, it is recorded in the company’s books.

To prepare: The journal entries to record the estimated warranty liability and warranty cost:

(b)

To determine

The estimated warranty liability at December 31.

(c).

To determine

To prepare: The entry to record warranty cost incurred in January.