Warranty Costs Milford Company sells a motor that carries a three-month unconditional warranty against product failure. Based on a reliable statistical analysis, Milford knows that between the sale and the end of the product warranty period, two percent of the units sold will require repair at an average cost of $50 per unit. The following data reflect Milford's recent experience:

	October	November	December	Dec. 31 Total
Units sold	26,000	26,000	28,000	80,000
Known product failures from sales in:
October	130	190	160	480
November		140	220	360
December			210	210

Calculate, and prepare a journal entry to record, the estimated liability for product warranties at December 31. Assume that warranty costs of known failures have already been reflected in the records.

General Journal
Date	Description	Debit	Credit
Dec.31	Product Warranty ExpenseEstimated Liability for Product Warranty
	Product Warranty ExpenseEstimated Liability for Product Warranty
	To provide for estimated future warranty expense.