Accrued Product Warranty

Lachgar Industries disclosed estimated product warranty payable for comparative years as follows:

	( in millions)
	Year 2	Year 1
Current estimated product warranty payable	$16,872		$16,176
Noncurrent estimated product warranty payable	10,262		9,045
Total	$27,134		$25,221

Presume that Lachgars sales were $219,860 million in Year 2. Assume that the total paid on warranty claims during Year 2 was $17,394 million.

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a. The distinction between short- and long-term liabilities is important to creditors in order to accurately evaluate the near-term cash

receiptsdemandsdemands

on the business relative to the quick current assets and other longer-term

receiptsdemandsdemands

.

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Review the need for a classified balance sheet.

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b. Provide the journal entry for the Year 2 product warranty expense.

blank	CashProduct Warranty ExpenseProduct Warranty PayableSuppliesWages PayableProduct Warranty Expense	Product Warranty Expense
	CashProduct Warranty ExpenseProduct Warranty PayableSuppliesWages PayableProduct Warranty Payable		Product Warranty Payable