Betancourt Company sells automatic can openers under a 75-day warranty for defective merchandise. Based on past experience, Betancourt estimates that 3% of the units sold will become defective during the warranty period. Management estimates that the average cost of replacing or repairing a defective unit is $15. The units sold and units defective that occurred during the last 2 months of 2017 are as follows.

Month		Units Sold		Units Defective Prior to December 31
November		39,200		784
December		41,200		515

(a)

Prepare the journal entries to record the estimated liability for warranties and the costs incurred in honoring 1,299 warranty claims. (Assume actual costs of $19,485.) (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Account Titles and Explanation	Debit	Credit
Warranty Expense	$36, 180
Warranty Liability		$36,180
(To accrue estimated warranty costs.)
Warranty Liability	$19,485.00
Repair Parts		$19,485.00

(b)

Determine the estimated warranty liability at December 31 for the units sold in November and December.

Estimated warranty liability

$