Journal entries for warranty liabilities and subsequent expenditures. Miele Company is a German family-owned appliance business. Assume that Miele provides a two-year warranty on its products and that Miele estimates 2008 warranty costs to be 4% of sales revenues. At the end of 2007, Miele's balance sheet carrying value of estimated warranty Liabilities was €30,000. Miele will incur actual warranty costs over the two years following the time of sales. Assume that sales (all on account) and actual warranty expenditures (all paid in cash) were as follows:

(a) Prepare journal entries to recognize sales revenues, warranty costs, and warranty expenditures in 2008 and 2009. Closing entries are not required.
(b) What is the balance in the Warranty Liability account at the end of2009?

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Actual Warranty Expenditures Sales 2008. €1,200,000 1,500,000 €12,000 2009 50,000