Exercise 4. Estimated Warranty Payable: a. During Year 7, ECU Corporation estimates WARRANTY EXPENSE related to product warranties as equal to 2.5% of its $15,000,000 in sales/leading to an increase in WARRANTY PAYABLE. Phrase 1st: Account Category Affect Dr. or Cr. AL SE RE contra + - Dr Cr 2nd: AL SERE contra + - Dr Cr Date Accounts Debit Credit b. In Year 8 ECU Corporation reduces its WARRANTY PAYABLE by honoring warranty claims from customers/ by paying $120,000 CASH to an out-sourcing repair service business / and by delivering $135,000 of new products from its INVENTORY to replace products that could not be repaired. Phrase Account 1st: 2nd: 3rd: Date Accounts Category Affect Dr. or Cr. AL SERE contra + - Dr Cr AL SERE contra + - Dr Cr AL SERE contra + - Debit Dr Cr Credit