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Exercise 13-24 (Algo) Warranty expense; change in estimate [LO13-5, 13-6] Woodmier Lawn Products Introduced a new line of commercial sprinklers in 2020 that carry a one-year warranty agalnst manufacturer's defects. Because this was the first product for which the company offered a warranty, trade publications were consulted to determine the experlence of others In the Industry. Based on that experlence, warranty costs were expected to approximate 2% of sales. Sales of the sprinklers in 2020 were $3.0 million. Accordingly, the following entries relating to the contingency for warranty costs were recorded during the first year of selling the product Credit General Journal Debit Accrued liability and expense Warranty expense (2X x $3,000, e00) Warranty liability 60, eee 68,e00 Actual expenditures (sunnary entry) Warranty liability Cash 26,e00 26,eee In late 2021, the company's clalms experlence was evaluated and It was determined that clalms were far more than expected-3% of sales rather than 2%. Required: 1. Assuming sales of the sprinklers In 2021 were $4.1 million and warranty expenditures In 2021 totaled $93,000, prepare any Journal entries related to the warranty. 2 Assuming sales of the sprinklers were discontinued after 2020, prepare any Journal entry(s) In 2021 related to the warranty. Complete this question by entering your answers in the tabs below. Required 2 Required 1 Assuming sales of the sprinklers in 2021 were $4.1 million and warranty expenditures in 2021 totaled $93,000, prepare any journal entries related to the warranty. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in whole dollars.) Vlew transaction lst Journal entry worksheet Record the accrued liability and expense. Note: Enter debits before credits. Transaction General Journal Debit Credit Record entry Clear entry Vlew general journal < Required 1 Required 2 >

Answer 1

REQUIRED 1 :
Transaction	General journal	Debit	Credit
1)	Warranty expense ( 3 %* $ 4,100,000)	$ 123,000
	Estimated warranty liability		$ 123,000
	(To record the accrued liability and expense)
2)	Estimated warranty liability	$ 93,000
	cash ,wages payable , parts and supplies etc..		$ 93,000
	( To Record the actual expenditures )
REQUIRED 2 :
Transaction	General journal	Debit	Credit
1)	Estimated warranty liability (60,000 -26,000)	$ 34,000
	warranty expense { (3% - 2%)* $ 3,000,000 }	$ 30,000
	cash ,wages payable , parts and supplies etc..		$ 64,000
	{(3% *$3,000,000)- $26,000 } =
	( To Record the actual expenditures )