Reference no: EM132913312

Question - In 2020, Dare Company began selling a new calculator that carried a two-year warranty against defects.

The entity projected the estimated warranty cost as a percent of sales.

First year of warranty 4%

Second year of warranty 10%

Sales and actual warranty repairs were:

2020 2021

Sales 5,000,000 9,000,000

Actual warranty repairs 200,000 560,000

Required -

1. Prepare journal entries in connection with the warranty using the "expense as incurred" approach.

2. Prepare journal entries in connection with the warranty using the "accrual" approach.

3. Determine the estimated warranty liability on December 31, 2021.