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DEF Inc offers a one year warranty. The warranty covers the cost of parts, plus labour for repairs. Warranty costs are estimated to be 1.5% of sales for parts plus 3% of sales for labour. On 1 May, the warranty liability had a $25,200 credit balance. Warranty work in May consumed $10,600 of parts and $16,450 of labour. Sales amounted to $690,000 in May. Required: 1. What amount of warranty expense should be recorded in May? Warranty expense 2. What is the balance in the warranty provision at the end of May? Balance in the warranty provision Best Ltd. has guaranteed a $840,000 loan of Grand Ltd., a customer. There is security valued at $546,000-assets of Grand- registered against the loan. Best estimates that there is a 30% chance that it will be required to step in and pay $294,000 on the loan this coming year. Required: Calculate the liability Best must record, if any. Liability