Answer:
amount of warranty liability that should be reported at December 31, 2021 is $3,375
Explanation:
<em>When the Sale was made, the Warrant Liability is recorded as follows:</em>
Warranty Cost $5,625 (Debit)
Warranty Provision $5,625 (Credit)
Warranty Cost = 750 cell phones × $75 × 10% = $5,625
<em>When Warranty Claims were received during the year the records are as follows :</em>
Warranty Provision $2,250 (Debit)
Cash $2,250 (Debit)
Warranty Cost = 30 × $75 = $2,250
<em>At December 31, 2021 the amount of warranty liability should be</em>
Warranty Provision = $5,625 - $2,250 = $3,375
