Inline Incorporated manufactures skates and equipment for in-line skating. The company offers a one-year warranty on all products. During 2014, the company recorded net sales of $4,127.8 million. Historically, about 3% of all sales are returned under warranty and the cost of repairing and or replacing goods under warranty is about 50% of retail value. Assume that at the start of the year Inlines balance sheet included an accrued warranty liability of $15.4 million and at the end of the year, the accrued warranty liability balance was $11.5 million.

Required:

Use FSET to record

1. Inlines warranty expense for 2014.

2. Inlines payment during the year to repair and or replace goods under warranty