Accrued Product Warranty

Ford Motor Company $($F$)$ disclosed the following estimated Product warranty payable for two recent years.

Ford's sales in its automotive sector were $$143,599$ million in Year $2$ and $$148,294$ million in Year $1.$ Assume that the total paid on warranty claims during Year $2$ was

$$4,360$ million.

a$.$ Illustrate the effects on the accounts and financial statements for the Year $2$ product warranty expense. If no account or activity is affected, select $"$No effect"

from the dropdown list and leave the corresponding number entry box blank. Enter account decreases, cash outflows, and the income statement effects

that decrease net income as negative amounts.

Enter amounts in millions.

Financial Statement Effects