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Bulldog Co. is preparing its December 31, Year 3, financial statements.

All adjustment amounts are material and the company justified all of the changes referred to below. No prior adjustments have been recorded.

Bulldog provides credit to its customers. The customer agreement requires the customer to pay a $40 penalty for late payments. A Year 2 court decision indicated that the penalty was excessive and gave customers reimbursement recourse for this charge. The company recorded a Year 2 liability of $1,000,000 for the reimbursements, which constituted the company's estimated total liability. In the first quarter of Year 3, the expected claims increased by 25% over the initial estimate.

For each of the items listed, prepare the journal entry that should be recorded at the end of Year 3.

To prepare each required journal entry:

• Click on the first cell in the Type of Change column and select the appropriate option from the list.
• Click on a cell in the Account Name column and select from the option list the appropriate account. An account may be used once, more than once, or not at all.
• Enter the corresponding debit or credit amount in the associated column.
• Round all amounts to the nearest whole number.
• Not all rows in the table might be needed to complete each journal entry.
• If no journal entry is needed, check the No entry required box at the top of the table as your response.

1. Record any required Year 3 journal entry related to the reimbursement liability.

No Entry Required

Account Name	Debit	Credit	Type of Change

2. In Year 3, Bulldog determined that it recorded duplicate sales invoices in Years 1 and 2 for $100,000 and $135,000, respectively. Bulldog's effective tax rate for Years 1 through 3 is 30%. Record any required Year 3 journal entry related to the Years 1 and 2 sales.

No Entry Required

Account Name	Debit	Credit	Type of Change