Answer:
Warranty expense 14,700 debit
Warranty liability 14,700 credit
Explanation:
The idea is <u>similar </u>to allowance for doubful accounts.
We need match the chance of uncollectible found to the period on when the sale ocour.
<em>Here we are matching the warrant cost, which can be anytime in the future.</em>
<em>With the time on which the sold is done, recognizing an expense.</em>
Expected warranty liability: 5% of sales
362,000 x 5% = $18,100
Current balance (3,400)
<em>Adjustment 14,700</em>
<em />
<u><em>The returned goods </em></u>had a cost of 8,800 this are accounted against warrant liability. so the balance decreased to 3,400