Julia Used Cars offers a one-year warranty from the date of sale on all cars it sells. From historic data, Bill Julia estimates that, on average, each car will require the company to incur warranty cost of $820. The cars sold for an average of $9,500 each. The following activities occurred during 2017.

 

Feb	4	Sold five cars.
Mar	23	Sold ten cars.
May	20	Incurred warranty costs of $6,000 on four cars sold in 2016.
July	6	Sold eight cars.
Sep	1	Incurred warranty costs of $5,000 on five cars sold in 2016.
Nov	14	Incurred warranty costs of $4,000 on one car sold in 2016.
Dec	22	Sold twelve cars.

If Julia accrued its warranty liability with a single adjusting entry at year-end, the journal entry would include:

a debit to Warranty Liability for $28,700a debit to Warranty Expense for $28,700a credit to Parts for $17,220a credit to Cash for $28,700