Recording and Reporting Warranties During Year 1, Ward Company introduced a new product carrying a three-year warranty against defects, which has a separate purchase price. The company collected $32,000 and $56,000 for this separate warranty in Year 1 and Year 2, respectively. The company uses straight-line recognition of warranty revenue. For simplification, assume that sales occurred at the first of the year. Sales and actual warranty expenditures for the years ended December 31 Year 1 and Year 2 follow: Sales Year 1 $960,000 Year 2 1,600,000 $2.560,000 Actual Warranty Expenditures $14,400 48,000 $62,400 Required a. Record the journal entries for Year 1 and 2 for (1) the sale of the products and warranties on credit, (2) incurred cash warranty costs, and (3) recognition of warranty revenue. b. What liability would be reported on the balance sheet at the end of Year 1 and Year 2? Note: Round your answers to the nearest whole dollar. Date Account Name a. (1) Year 1 a. (2) Year 1) To record sale of products and warranties To record incurred warranty costs a. (3) Year 1 To recognize warranty revenue a. (1) Year 2 2 > > > > > > > > > > To record sale of products and warranties a. (2) Year 2 To record incurred warranty costs a. (3) Year 2 To recognize warranty revenue Dr. Cr. Balance Sheet, Dec. 31 Year 1 Year 2 b. Current liabilities 0 $ $