We sell 1000 units of inventory during January 2kA at $5k/unit, each warrantied for 2 years. Estimated warranty cost to repair returned units (from repair cost records): $200/unit. Based on experience, we expect 4% returns within a year of the sale date; 6% returns in 2nd year. 2kA actual warranty cost: $110k for the year. 2kB actual warranty cost: $130k. Account for these events using a. the usual method (accrual), and b. the warranty revenue method.

with explanation please