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Question - During its first year of operations, Keene Limited had sales of $76,500. The company offers a 2-year limited warranty on all sales and expects that warranty costs for the first year will average 0.5% of sales with an additional 1.5% in the second year. During the current year, the company spent $1,200 on warranty repairs.
Required -
1. Create all journal entries related to the warranty for the current year.
2. How will the warranty liability be reported on the company's year-end balance sheet?
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