Chapter 8, Problem 8.13E

1

To determine

Liabilities:

Liabilities are an obligation of the business to pay to the creditors in future for the goods and services purchased on account or any for other financial benefit received. It can be current liabilities or a non-current liabilities depending upon the time period in which it is paid.

To Identify: Whether the situation represents a contingent liability.

2

To determine

To Record: the warranty expense and warranty liability for the month of December based on 6% of sales.

3

To determine

 To Record: the payment of the actual warranty expenditures of $13,000 in January.

4

To determine

To Identify: the balance in the warranty liability account.