Fungus Audio Works Inc. warrants its products for one year. The estimated product warranty is 3% of sales. Assume that...

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Fungus Audio Works Inc. warrants its products for one year. The estimated product warranty is 3% of sales. Assume that sales were $680,000 for January. In February, a customer received warranty repairs requiring $4,200 of parts.

  • a. Determine the warranty liability at January 31, the end of the first month of the current year.
  • b. What accounts are decreased for the warranty work provided in February?
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