The sale of a product with a warranty is a past event that creates a present obligation, which will require company resources (repair or replacement) to settle at some future date. Warranty expense is estimated in the year the product is sold To accrue warranty expense: Dr. Warranty Expense Cr. Warranty Liability To repair/replace defective products under warranty: Dr. Warranty Liability Cr. Cash, Inventory, etc. At December 31, Year 1, a firm estimates that its one-year warranty costs related to the current year's sales will equal 1% of sales of $200,000. Prepare Year 1 entries. To accrue warranty