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Clean-All Inc. sells washing machines with a 3-year assurance-type warranty. In the past, Clean-All has...

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Accounting

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Clean-All Inc. sells washing machines with a 3-year assurance-type warranty. In the past, Clean-All has found that in the year after sale, warranty costs have been 3% of sales in the second year after sale, 5% of sales, and in the third year after sale, 7% of sales. The following data are also available: Warranty Expenditures Year Sales 2019 $500,000 $62,000 2020 650,000 82,000 2021 700,000 85,000 2020 650,000 82,000 2021 700,000 85,000 Required: 1. Prepare the journal entries for the preceding transactions for 2019-2021. Closing entries are not required. 2. What amount would Clean-All report as a liability on its December 31, 2021, balance sheet, assuming the liability had a balance of $88,200 on December 31, 2018? 3. Next Level How would the failure to recognize a contingent liability affect the financial statements

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