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Clean all Inc sells washing machine with a three year warranty

Clean all Inc. sells washing machine with a three year warranty. In the past Clean all has found that in the year after sale, warranty cost have been 3% of sales: in the second year after sale 5% of sales and in the third year after sale 7%of sales . the following data are also available.

Year                                          Sales                          Warranty Expenditures
 
2007                                        500,000                               62,000
 
2008                                       650,000                                82,000
 
2009                                       700,000                                85,000
Required
 
1. Prepare the journal entries for the preceding transactions for 2007-2009, using the expense warranty accrual method. closing entries are not required.
 
2. What amount would clean-All report as a liability on its December 31, 2009 balance sheet, assuming the liability had abalance of 88,200 on December 31,2006?

May 01 2018 View more View Less

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