The Company currently provides a standard two-year limited warranty on all new motorcycles sold worldwide, except for Japan, where the Company provides a standard three-year limited warranty on all new motorcycles sold. In addition, the Company offers a one-year warranty for Parts & Accessories (P&A). The warranty coverage for the retail customer generally begins when the product is sold to a retail customer. The Company accrues for future warranty claims using an estimated cost based primarily on historical Company claim information. Additionally, the Company has from time-to-time initiated certain voluntary recall campaigns. The Company accrues for the estimated cost associated with voluntary recalls in the period that management approves and commits to the recall. Changes in the Company’s warranty and recall liability were as follows (in thousands):

	2018	2017	2016
Balance, beginning of period	$94,200	$79,482	$74,217
Warranties issued during the period	53,367	57,834	60,215
Settlements made during the period	(79,300)	(82,554)	(99,298)
Recalls and changes to pre-existing warranty liabilities	63,473	39,438	44,348
Balance, end of period	$131,740	$94,200	$79,482

The liability associated with recalls was $73.3 million, $35.3 million, and $13.6 million at December 31, 2018, 2017, and 2016, respectively.

Required
Using the financial statement effects template, record separately the 2018 warranty liability transactions relating to the (1) “Warranties issued during the period,” (2) “Recalls and changes to preexisting warranty obligations,” and (3) “Settlements made during the period.”
Note: For each account category, indicate the appropriate account name. Enter "N/A" for any account category that is not used for a given transaction.
Note: Indicate a decrease in an account category by including a negative sign with the amount.

($ 000s)

	Balance Sheet									Income Statement
Transaction	Cash Asset	+	Noncash Assets	=	Liabilities	+	Contrib. Capital	+	Earned Capital	Revenues	–	Expenses	=	Net Income
1.				=							–		=
	CashGain on warranties Interest expense Interest revenue Retained earnings Warrant payable Warranty expense N/A		CashGain on warranties Interest expense Interest revenue Retained earnings Warrant payable Warranty expense N/A		CashGain on warranties Interest expense Interest revenue Retained earnings Warrant payable Warranty expense N/A		CashGain on warranties Interest expense Interest revenue Retained earnings Warrant payable Warranty expense N/A		CashGain on warranties Interest expense Interest revenue Retained earnings Warrant payable Warranty expense N/A	CashGain on warranties Interest expense Interest revenue Retained earnings Warrant payable Warranty expense N/A		CashGain on warranties Interest expense Interest revenue Retained earnings Warrant payable Warranty expense N/A
2.				=							–		=
	CashGain on warranties Interest expense Interest revenue Retained earnings Warrant payable Warranty expense N/A		CashGain on warranties Interest expense Interest revenue Retained earnings Warrant payable Warranty expense N/A		CashGain on warranties Interest expense Interest revenue Retained earnings Warrant payable Warranty expense N/A		CashGain on warranties Interest expense Interest revenue Retained earnings Warrant payable Warranty expense N/A		CashGain on warranties Interest expense Interest revenue Retained earnings Warrant payable Warranty expense N/A	CashGain on warranties Interest expense Interest revenue Retained earnings Warrant payable Warranty expense N/A		CashGain on warranties Interest expense Interest revenue Retained earnings Warrant payable Warranty expense N/A
3.				=							–		=
	CashGain on warranties Interest expense Interest revenue Retained earnings Warrant payable Warranty expense N/A		CashGain on warranties Interest expense Interest revenue Retained earnings Warrant payable Warranty expense N/A		CashGain on warranties Interest expense Interest revenue Retained earnings Warrant payable Warranty expense N/A		CashGain on warranties Interest expense Interest revenue Retained earnings Warrant payable Warranty expense N/A		CashGain on warranties Interest expense Interest revenue Retained earnings Warrant payable Warranty expense N/A	CashGain on warranties Interest expense Interest revenue Retained earnings Warrant payable Warranty expense N/A		CashGain on warranties Interest expense Interest revenue Retained earnings Warrant payable Warranty expense N/A

Answer rating: 100% (QA)

Answer 1 WP Warra... View the full answer