In the past, Eastern Automotive's warranty expense has been $8\%$ of sales. During

$2025,$ Eastern Automotive made sales of $$136,000$ and paid $$7,000$ to satisfy

warranty claims.

Requirements

Journalize Eastern Automotive's warranty expense and warranty payments during $2025.$

Explanations are not required.

What balance of Estimated Warranty Payable will Eastern Automotive report on its

balance sheet at December $31,2025?$

Solution: