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Problem - Estimated warranty liability
Caldwell Industries sold $410,000 of consumer electronics during August under a nine-month warranty. The cost to repair defects under the warranty is estimated at 4% of the sales price. On October 15, a customer was given $110 cash under terms of the warranty.
Provide the journal entry for (a) the estimated warranty expense on August 31 and (b) the October 15 cash payment.
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