Jack Company sells residential freezers for $2,150 each. The price includes a two-year warranty. During 2019, the company sells 550 freezers. On the basis of past experience, warranty costs are estimated to be $160 per freezer. The actual warranty costs incurred to repair freezers by Jack Company during 2019 were $ 55,000 in cash.

Instructions:

a)Prepare journal entries to record the estimated warranty expense and the actual warranty costs paid during 2019 at December 31, 2019. (2 marks)

b)Assume the warranty liability account has an unadjusted credit balance of $4,300 at December 31, 2019. What is the adjusted liability balance at December 31, 2019? (2 marks)

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