Bombeck Company sells a product for $1,500. When the customer buys it, Bombeck provides a one-year warranty. Bombeck sold 120 products during 2017. Based on analysis of past warranty records, Bombeck estimates that repairs will average 3% of total sales.

Required

1. Prepare the journal entry to record the estimated liability.

2. Assume that during 2017, products under warranty must be repaired using repair parts from inventory costing $4,950. Prepare the journal entry to record the repair of products.