Clean all inc sells washing machine with a three

Reference no: EM13610963

Clean all Inc. sells washing machine with a three yearwarranty. In the pastClean all has found that in the year aftersale, warranty cost have been 3% of sales: in the second yearaftersale 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 transactionsfor 2007-2009, using the expense warranty accrual method. closingentries are not required.

2. What amount would clean-All report as a liability on itsDecember 31, 2009 balance sheet, assuming the liability had abalance of 88,200 on December 31,2006?

Reference no: EM13610963

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