Montague Auto Repair specializes in the repair of foreign car transmissions. To encourage business, Montague offers a 6-month warranty on all repairs. The following data are available for

2019:00:00

Transmissions repaired, 2019................................................ 4,500

Expected frequency of warranty claims ....................................0.09 per repair

Actual warranty claims, 2019............................................ $110,000

Estimated warranty liability, 1/1/19 .................................... $ 25,000

Estimated cost of each warranty claim .....................................$ 250

Assume that warranty claims are paid in cash.

Required:

1. Compute the warranty expense for 2019.

2. Prepare the entry to record the payment of the 2019 warranty claims.

3. What is the December 31, 2019, balance in the warranty liability account? Why has the balance in the warranty liability account changed from January 1, 2019?