OBJECTIVE 4

In 2013, Lee Electronics, a franchise of electronics stores located in small towns throughout the United States, sold 45032 inch televisions for $575 each. The televisions carry an attached 3-year warranty for repairs. Lee Electronics estimates that repair costs will average 2% of the total selling price.

Required:

How much is recorded in the Warranty Liability account as a result of selling the televisions during 2013, assuming no warranty service has yet been performed?

Provide the necessary adjusting entry at December 31, 2013.