Climbing Entity (CE) Started Selling Harnesses to Mountain Climbers Around

Essay

Climbing Entity (CE) started selling harnesses to mountain climbers around the world in 20X7. In November, 20X8, CE discovered that a buckle on its harnesses was defective and failed when the harness was heavily stressed. FE has a warranty policy against defective harnesses and anticipates (it is more likely than not) that thousands of harnesses will be returned to the entity.
-CE has determined that it needs to recognize a provision relating to the faulty harnesses it sold. Management has assembled the following data:
• Number of harnesses sold - 75,000
• Harnesses anticipated to have no defects - 70%
• Harnesses anticipated to have minor defects - 20%
• Harnesses anticipated to have major defects - 10%
• Management estimates that the cost of repairing each harness with a minor defect is $40 and a major defect $120,
What is CE's journal entry on December 31, 20X8?