Sage Hill Supply sells products that carry a two$-$year warranty. Any defective product is replaced with a new item taken from inventory. Management believes that this is the most cost$-$effective way to deal with any defects or customer complaints. Estimates of claims are expected to be $3$ out of every $100$ units sold. The units sell for $$22$ and cost $$12.$ All sales are on account, and the $13\%$ HST is not included in the selling price.

Sage Hill has a calendar year end and uses a perpetual inventory system.

$($a$)$

Your answer is partially correct.

Prepare journal entries for the following transactions:

$1.$ Sales on account for $4,800$ units $+$ HST

$2.$ Year$-$end accrual for warranty expense

$3.$ Replacement of $41$ units under warranty