Precision Audio Company warrants its products for one year. The estimated product warranty is 3% of sales.

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Precision Audio Company warrants its products for one year. The estimated product warranty is 3% of sales. Assume that sales were \($400,000\) for January. In February, a customer received warranty repairs requiring \($200\) of parts.

a. Determine the warranty liability at January 31, the end of the first month of the current year.

b. What accounts are decreased for the warranty work provided in February.

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