Estimated Warranty Liability Savory Co. sold $434,000 of equipment during January under a two-year warranty. The cost to repair defects under the warranty is estimated at 7% of the sales price. On August 15, a customer required a $300 part replacement, plus $245 of labor under the warranty. Required:
(a) Provide the journal entry for the estimated warranty expense on January 31 for January sales. Jan. 31 Cash Accounts Payable Feedback Contingent liability entries are needed when the amount can be reasonably estimated and the liability is probable. Recorded contingent liabilities follow the matching concept. Contingent liabilities are an accrued expense adjusting entry.
(b) Provide the journal entry for the August 15 warranty work. If an amount box does not require an entry, leave it blank. Aug. 15 Product Warranty Expense Product Warranty Expense Product Warranty Expense

Suppose an economist believes that the price level in the economy is directly related to the money supply, or the amount of money circulating in the economy. the economist proposes the following relationship: p=a x m - p=price level - m=money supply - a=a composite of other factors, including real gdp, that change very slowly over time. how might an economist gather empirical data to test the proposed relationship between money and the price level? an economist would persuade the federal reserve to change the money supply to various levels, and observe the resulting changes in the price level. unlike researchers in the hard sciences, economists cannot study complex relationships using data. economists do not usually develop theoretical models of the economy but only analyze summary statistics about the current state of the economy. an economist would look for data on past changes in the money supply, and note the resulting changes in the price level

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Martinez company has the following two temporary differences between its income tax expense and income taxes payable. 2017 2018 2019 pretax financial income $873,000 $866,000 $947,000 (2017' 2018, 2019) excess depreciation expense on tax return (29,400 ) (39,000 ) (9,600 ) (2017' 2018, 2019) excess warranty expense in financial income 20,000 9,900 8,300 (2017' 2018, 2019) taxable income $863,600 $836,900 $945,700(2017' 2018, 2019) the income tax rate for all years is 40%. instructions: a. prepare the journal entry to record income tax expense, deferred income taxes, and income taxes payable for 2017, 2018, and 2019. b. assuming there were no temporary differences prior to 2016, indicate how deferred taxes will be reported on the 2016 balance sheet. button's warranty is for 12 months. c. prepare the income tax expense section of the income statement for 2017, beginning with the line, "pretax financial income."