Warranty accruals Balmer Ltd has a warranty plan. Estimated warranty liability was $50 000 at the beginning of the year. Based on the company’s sales for the year, warranty service costing $78 500 in wages and other costs, plus $62 000 in replacement products, was expected to have to be provided eventually. Actual expenditures for the year were

$84 000 in wages and other costs and $78 000 in replacement products.

1 Calculate warranty expense for the year and estimated warranty liability at the end of the year.

2 Write one or more journal entries to record Balmer Ltd’s warranty experience for the year.