WARRANTIES Montague Auto Repair specializes in the repair of foreign car transmissions. To encourage business, Montague offers a six-month warranty on all repairs. The following data are available for 2009:

Transmissions repaired, 2009 1,250 Expected frequency of warranty claims 0.12 per repair Actual number of warranty claims, 2009 75 Estimated warranty liability, 1/1/09 $ 550 Cost of each warranty claim $ 10 Assume that warranty claims are paid in cash.

Required:

. Compute the warranty expense for 2009.

. Prepare the entry to record the payment of the 2009 warranty claims.

. What is the December 31, 2009, balance in the estimated warranty liability account?

Why has the balance in the estimated warranty liability account changed from January 1, 2009?