Chapter 11, Problem 18E

To determine

Warranty Expense:

A warranty expense is the estimated cost which may or may not incur for the repair or replacement of goods sold to customer during the warranty period. A business does not incur such liability after the expiration of warranty period.

To determine:

1. Prepare journal entry to record its estimated warranty liabilities for 2013.

2. Prepare journal entry to record its cost related to its warranty program for 2013.

3. Determine the warranty expense incurred by Volvo for year 2013.