Strand Refrigeration Company introduced a new line of commercial freezers in 20x8 that

carry a one-year warranty against manufacturer's defects. Because this was the first

product for which the company had offered a warranty, trade publications were consulted

to determine the experience of others in the industry. Based on that experience, warranty

costs were expected to approximate 1% of sales. Sales of the freezers in 20x8 were

$1,800,000.

Accordingly, the following entries relating to the contingency for warranty costs were

recorded during the first year of selling the product:

Warranty expense (1% x $1,800,000) 18,000

Estimated warranty liability 18,000

Estimated warranty liability 7,500

Miscellaneous accounts 7,500

In late 20x9, the company's claims experience was evaluated and it was determined that

claims were far more than expected: 2% of sales rather than 1%.

Required

(a) Assuming sales of the freezers in 20x9 were $2,500,000 and warranty

expenditures in 20x9 totaled $60,000 ($22,000 related to 20x8 sales and 38,000

related to 20x9 sales), prepare any journal entries related to the warranty.

(b) Assuming sales of the freezers were discontinued after 20x8, and warranty

expenditures in 20x9 totaled $22,000, prepare any journal entry(ies) in 20x9

related to the warranty.