Reference no: EM132448086

Question - Waterway Factory provides a 2-year warranty with one of its products which was first sold in 2017. Waterway sold $976,100 of products subject to the warranty. Waterway expects $119,940 of warranty costs over the next 2 years. In that year, Waterway spent $64,080 servicing warranty claims. Prepare Waterway's journal entry to record the sales (ignore cost of goods sold) and the December 31 adjusting entry, assuming the expenditures are inventory costs.