In 2012, Carver Electronics Co. began selling a new computer that carried a 2-year warranty against defects. Based on the manufacturer's recommendations, Carver projects estimated warranty costs (as a percentage of dollar sales) as follows:

First year of warranty 4%

Second year of warranty 7%

2013 2012

Sales : $850,000 $700,000

Actual warranty Repairs 30,750 18,500

Analyze the warranty liability account as of the year ended December 31, 2013, to see if the actual repairs approximate the estimate. (Assume sales and repairs occur evenly throughout the year.)

2012 sales still under warranty for 6 months

2013 sales still under warranty for 18 months

Ending balance in liability accounts

Predicted future warranty repairs

Difference