Riley Corporation manufactures and sells weedeaters. Riley provides all customers with a three- year warranty guaranteeing to repair, free of charge, any defects reported during this time period.

During the year, it sold 85,000 weedeaters for $225 each. Analysis of past warranty records indicates that 8% of all sales will be returned for repair within the warranty period. Riley expects to incur expenditures of $15 to repair each weedeater. The account Estimated Liability for Warranties had a balance of $115,000 on January 1. Riley incurred $90,000 in actual expenditures during the year. REQUIRED: Prepare all journal entries necessary to record the events related to the warranty transactions during the year. Determine the adjusted ending balance in the Estimated Liability for Warranties account