Hardin Manufacturing Began Operations in January 2014

Essay

Hardin Manufacturing began operations in January 2014. Hardin manufactures and sells two different computer monitors.
Monitor A, is a flat panel hi-definition monitor, which carries a two-year manufacturer's warranty against defects in workmanship. Hardin's management project that 8% of the monitors will require repair during the first year of the warranty while approximately 6% will require repair during the second year of the warranty. Monitor A sells for $400. The average cost to repair a monitor is $80.

Monitor B is a regular LED monitor that retails for $150. Hardin has entered into an agreement with a local electronics firm who charges Hardin $20 per monitor sold and then covers all warranty costs related to this monitor.
Sales and warranty information for 2014 is as follows:
Sold 2,000 monitors (800 monitor A and 1,200 monitor B); all sales were on account.
Actual warranty expenditures for monitor A were $4,000.
Instructions
a. Prepare journal entries that summarize the sales and any aspects of the warranty for 2014.
b. Determine the balance in the Warranty Liability account at the end of 2014.