Renew Energy Ltd. (REL) manufactures and sells directly to customers a special long-lasting rechargeable battery for use in digital electronic equipment. Each battery sold comes with a guarantee that the company will replace free of charge any battery that is found to be defective within six months from the end of the month in which the battery was sold. On June 30, 2020, the Warranty Liability account had a balance of $45,000, but by December 31, 2020, this amount had been reduced to $5,000 by charges for batteries returned.

REL has been in business for many years and has consistently experienced an 10% return rate. However, effective October 1, 2020, because of a change in the manufacturing process, the rate increased to a total of 12%. Each battery is stamped with a date at the time of sale so that REL has developed information on the likely pattern of returns during the six-month period, starting with the month following the sale. (Assume no batteries are returned in the month of sale.)

Month Following Sale 1st 2nd 3rd 4th 5th 6th % of Total Returns Expected in the Month 20% 30% 20% 1096 1096 1096 100% For example, for January sales. 20% of the returns are expected in February 30% in March, and so on. Sales of these batteries for the second half of 2020 were: Month July August September October November December Sales Amount $1,700,000 1,600,000 2.200.000 1,400,000 1,000,000 800,000 REL's warranty also covers the payment of the freight cost on defective batteries returned and on new batteries sent as replacements. This freight cost is 10% of the sales price of the batteries returned. The manufacturing cost of a battery is roughly 60% of its sales price, and the salvage value of the returned batteries averages 14% of the sales price. Assume that REL follows IFRS and that it uses the expense approach to account for warranties. * Your answer is incorrect. Calculate the warranty expense that will be reported for the July 1 to December 31, 2020 period. Warranty Expense $ 934,000 eTextbook and Media X Your answer is incorrect. Calculate the amount of the accrual that you would expect in the Warranty Liability account as at December 31, 2020, based on the above likely pattern of returns. Provision in the Warranty Liability account $ 298,520 eTextbook and Media