Warranties

In 2013, BMJ Plumbing Company sold 250 water heaters for $1,050 each. The water heaters carry a 5-year warranty for repairs. BMJ Plumbing estimates that repair costs will average 2% of the total selling price.

Required:

1. How much is recorded in the warranty liability account as a result of selling the water heaters during 2013, assuming no warranty service has yet been performed? $

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2. Prepare the necessary adjusting entry at December 31, 2013.

Dec. 31
	(Record warranty expense)