Clean Corporation manufactures and sells dishwashers. Clean provides all customers with a two year warranty guaranteeing to repair, free of charge, any defects reported during this time period. During the year, it sold 100,000 dishwashers for $325 each. Analysis of past warranty records indicates that 12% of all sales will be returned for repair within the warranty period. Clean expects to incur expenditures of $14 to repair each dishwasher. The account Estimated Liability for Warranties had a balance of $120,000 on January 1. Clean incurred $150,000 in actual expenditures during the year.

Required:

Prepare all journal entries necessary to record the events related to the warranty transactions during the year. Determine the adjusted ending balance in the Estimated Liability for Warranties account.