(a)
Other significant liabilities
Other significant liabilities are liabilities other than current and long-term liabilities. These liabilities have a significant impact on the future
The contingent liability is not treated as a liability of the company on the date of the
Warranty Liability:
It is a contingent liability which the company records the repairs expenses and cost of replacement that is incurred for the goods that are sold. The company records liability based on the past experience of the company in providing repairs for the products sold.
The estimated warranty liability at December 31 for the units sold in November and December.
(b)
To Prepare: The journal entries to record the estimated liability for warranties, and the costs in honoring warranty claims.
(c)
To Prepare: The journal for honoring of 500 warranty contracts in January at an average cost of $15.
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