Warranties

Marshall Repairs and Detailing has recently opened its doors to provide quality auto repair services. To encourage business, Marshall offers a $6-$month warranty on all repairs. The following data are avallable for the year:

Transmissions repaired

Expected frequency of warranty claims

Actual warranty claims

Beginning balance for estimated warranty liability

Estimated cost of each warranty claim

$6,500$

$0\mathrm{.}03$ per repair

$$57,700$

$$45,900$

$$270$

Assume that warranty claims are paid in cash.

Required:

Compute the warranty expense for the year.

Prepare the entry to record the payment of the warranty claims for the year. If an amount box does not require an entry, leave it blank.

Warranty Expense

Warranty Liability

$($Record payment of clalms$)$