Ford Motor Company disclosed estimated product warranty payable for 2008 and 2007 as follows:

Ford's sales were $154,379 million in 2007 and decreased to $129,166 million in 2008. Assume that the total paid on warranty claims during 2008 was $3,076 million.a. Illustrate the effects on the accounts and financial statements for the 2008 product warranty expense.b. Assuming $3,076 million in warranty claims paid during 2008, explain the $1,022 million decrease in the total warranty liability from 2007 to2008.

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December 31 2007 (in millions) $4,862 2008 Product warranty payable $3,840