Geek Company manufactures and sells financial calculators. Each calculator costs $18.50 to produce and sells for $37. In addition, each calculator carries a warranty that provides for free replacement if it fails during the two years following the sale. In the past, 6 percent of the calculators sold have had to be replaced under the warranty. During July, Geek sold 78,000 calculators, and 4,900 calculators were replaced under the warranty. Prepare journal entries to record the estimated liability for product warranties during the month and the calculators replaced under warranty during the month.
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