Ridge Runner Corrector guarantees its snowmobiles for three years. Company experience indicates that warranty costs will be approximately 4 % of sales.

Assume that the Ridge Runner dealer in Colorado Springs made sales totaling $450,000 during 2016. The company received cash for 10% of the sales and notes receivable for the remainder. Warranty payments totaled $12,000 during 2016.

Requirements

1.	Record the sales, warranty expense, and warranty payments for the company. Ignore cost of goods sold.
2.	Post to the Estimated Warranty Payable T-account. At the end of2016, how much in Estimated Warranty Payable does the company owe? Assume the Estimated Warranty Payable is $0 on January 1,2016