1) Argo Computers Inc

1) Argo Computers Inc. restores and resells notebook computers.  It originally acquires the notebook computers from corporations upgrading their computer systems, and it backs each notebook it sells with a 90-day warranty against defects.  Based on previous experience, Argo Computers Inc. expects warranty costs to be approximately 2% of sales.  Sales for the month of December are $500,000.  Actual warranty expenditures in January of the following year were $5,000. 

a.       Record the estimated warranties for the month of December.

b.      Record the payment of the actual warranty expenditures of $5,000 in January of the following year.

c.       What is the balance in the Warranty Liability account after the entries in a. and b.?