Question: Mckay company provides a warranty on its products that it sells to consumers. At the end of August 2016, Mckay had sales in the amount of $725,000 and estimated that $14,500 worth of warranty repairs would be required. During the month, Mckay actually paid out $13,250 for warranty repairs. Based on this information:
A) Prepair the journal entry to record the warranty liability and warranty expense on August 31, 2016
B) What amount of warranty liability would appear on the balance sheet as of August 31, 2016?