During 2000, Ryan Appliance Wholesalers sold electric toasters with one-year war- *

ranties. By the end of the year, the company had repaired 300 toasters at an average cost (paid in cash) of $8 each. On December 31, 2000, the companyéstimated that, in 2001, it would repair, at an average cost of $8 per toaster, 500 toasters sold in 2000.

Required: (1) Using T-accounts, record the repair of the toasters during 2000.

(2) Using T-accounts, record the end-of-period adjustment for 2000.

(3) Show how the warranty expense and liability would be reported on the company’s 2000 financial statements.

 TYK-1