Nathalina Limited sells custom made jewellery which are sold with a 3 year warranty. The estimated warranty cost,based on experience,is 3% of sales theyear after the sale,2% of sales the second year after the sale and 1% of sales the third year after the sale. The companys total salesfor2020was$1.3million. Actual warranty work was performed in 2020 for a cost of

$50,000. The opening balance in the Warranty Liability account as of January 1,2020 was

$61,000.

Required:

]1. Prepare the journal entries for the warranty accrual and the actual warranty incurred for 2020 using the Expense Method.

2. What is the amount of the Warranty Liability to be reported on the Balance Sheet as at December 31, 2020 based on the Expense method?