A12-14 Provisions-Warranty: Garage Hardware Ltd. provides a product warranty for defects on two major lines of items sold since the beginning of 20X5. Line A carries a two-year warranty for parts and service, while Line B carries a three year warranty for parts and service. The warranty cannot be purchased separately, and is intended to provide assurance to customers that the products will operate in accordance with the specifications provided. Garage contracts with a local service company to service the warranty on Line A, at a cost of $75 per Page 886 unit payable at the date of sale. Garage performs its own warranty work for Line B. On the basis of experience. Garage estimates that warranty work costs 3% of sales for parts and 7% for labour and overhead for the entire three years: this cost is expected to be incurred 25% in Year 1, 10% in Year 2, and 65% in Year 3. Data is as follows: 20XS 20X6 20X7 700 1.000 none $ 610 660 600 800 none Sales in units, Line A Sales price per unit, Line A Sales in units, Line B Sales price per unit, Line B Actual warranty outlays, Line B Parts Labour and overhead $ 700 $ 750 $3,000 $ 9.600 $12,000 7,000 22.000 30,000 Required: 1. Prepare journal entries for annual sales, expense, and warranty transactions for 20x5 to 20X7, inclusive. Because of uncertainty of estimates, no discounting is to be applied. 2. How much is warranty expense in each year from 20x5 to 20x7? 3. What is the balance in the provision for warranty at 31 December 20X5, 20X6, and 20X7? 4. What warranty work is left to do at the end of 20X7