Brooks Corporation sells computers under a 2-year warranty contract that requires the corporation to replace defective parts and to provide the necessary repair labor. During 2014, the corporation sells for cash 451 computers at a unit price of $3,110. On the basis of past experience, the 2-year warranty costs are estimated to be $159 for parts and $209 for labor per unit. (For simplicity, assume that all sales occurred on December 31, 2014.) The warranty is not sold separately from the computer.1. Record any necessary journal entries in 2014, applying the cash-basis method.2. Record any necessary journal entries in 2014, applying the expense warranty accrual method.3. What liability relative to these transactions would appear on the December 31, 2014, balance sheet and how would it be classified if the expense warranty accrual method is applied?4. In 2015, the actual warranty costs to Brooks Corporation were $24,040 for parts and $41,080 for labor. Record the journal entry in 2015, applying the cash-basis method. Use "Inventory" account to record the warranty expense.
5. In 2015, the actual warranty costs to Brooks Corporation were $24,040 for parts and $41,080 for labor. Record the journal entry in 2015, applying the expense warranty accrual method. Use "Inventory" account to record the warranty expense.