Journal entries for arrant liabilities and subsequent expenditures. Kingspeed Bikes offers three-year warranties against defects on the sales of its high-end racing bikes. The firm estimates that the total cost of warranty claims over the three-year warranty period on bikes sold in 2008 will equal 6% of sales revenue in 2008. Kingspeed will incur actual warranty costs over the three-year period following the time of sale. Sales (all for cash) and actual warranty costs incurred on bikes under warranty (60% in cash and 40% in parts) appear next for wars 2008 2010:(a) Prepare journal entries for the events of 2008, 2009, and 2010. Closing entries are not required.(b) What is the balance in Warranty Liability account at the end of2010?
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Journal entries for arrant liabilities and subsequent expenditur