Question - Cullumber Factory provides a 2-year warranty with one of its products which was first sold in 2017. Cullumber sold $905,400 of products subject to the warranty. Cullumber expects $117,280 of warranty costs over the next 2 years. In that year, Cullumber spent $65,340 servicing warranty claims.
Prepare Cullumber's journal entry to record the sales (ignore cost of goods sold) and the December 31 adjusting entry, assuming the expenditures are inventory costs.