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Question - During 2021, WallaWalla Co. introduced a new line of machines that carry a three-uear warranty against manufacturer's defects. Based on industry experience, warranty costs are estimated to occur over three years and are estimated to be 2% of sales in the year of sale, 3% in the year after sale, and 4% in the second year after sale. Sales and actual warranty expenditures paid for the first three-year period were as follows:
Sales
Actual Warranty Expenses Paid
2021
$600,000
$9,000
2022
$1,400,000
$65,000
2023
$2,100,00
$135,000
$4,200,000
$209,000
Required -
1. What is the warranty expense in 2022?
2. What amount is the warranty liability at December 31, 2023?
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