49ers Appliances sells dishwashers for $1,200 each, which includes a 2-year warranty that requires the company to perform periodic services and to replace defective parts. During 2023, 49ers sold 600 dishwashers on account. Based on past experience, the company has estimated the total 2-year warranty costs per unit is $115. (Assume sales all occur at December 31, 2023.)

In 2024, Chapelle Company incurred actual warranty costs relative to 2023 dishwasher sales for $11,500.

Instructions

a) Using the expense warranty approach, prepare the entries to reflect the above transactions. (5 marks)

b) Independently, using the cash basis method, what are the Warranty Expense balances for 2023 and 2024 and prepare the entries. (4 marks)