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1.Liability For Warranties During 2021, Best Buy sells 500 big screen TVs for $700 each. Each TV has a three-year warranty. Best Buy estimates the

1.Liability For Warranties

During 2021, Best Buy sells 500 big screen TVs for $700 each. Each TV has a three-year warranty. Best Buy estimates the warranty cost per TV sold will be $80.

Record the adjusting entry at the end of 2021 to record the estimated warranty liability.

During 2022, Best Buy pays $10,000 in warranty costs in cash. Prepare the journal entry to record the payment of the warranty costs at the end of 2022.

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