In December 2018, Hope Corporation sold 1,000 electric heaters for $100 each with a two-year replacement warranty. Hope estimated that 3% and 5% of the units sold would become defective during the warranty period. 30 units sold in December 2018 were returned under warranty during January 31, 2019 and replaced promptly from inventory at a cost of $70 each.

Prepare Hope Corporations December 31, 2018 adjustment to record the estimated warranty payable for Dec 2018 and the warranty usage entry for Jan 31, 2019.

Assume the Estimated Warranty Payable account had a $200 Debit balance before the December 31 adjustment. Use a T account to show the balance of estimated warranty payable at the end of Jan 31 2019 with the above information