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During 20X0, the Lynch Appliance Company had cash sales of $750,000. The company estimates the cost...

During 20X0, the Lynch Appliance Company had cash sales of $750,000. The company estimates the cost of servicing products under warranty will average 3% of sales.

1. Prepare journal entries for sales revenue and the related warranty expenses for 20X0. Assume all sales are for cash.

2. The liability for warranties was $11,600 at the beginning of 20X0. Expenditure (all in cash) to satisfy warranty claims during 20X0 was $20,600 of which $4,100 was for products sold in 20X0. Prepare the journal entry for the warranty expenditures.

3. Compute the balance in the Liability for Warranties account at the end of 20X0.

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