E11-5B Morse Company sells automatic can openers under a 75-day warranty for defective merchandise. Based on past experience, Morse estimates that 4% of the units sold will become defective during the warranty period. Management estimates that the average cost of replacing or repairing a defective unit is $16. The units sold and units defective that occurred during the last 2 months of 2017 are as follows. Record estimated liability and expense for warranties. (LO 2) Month Units Sold Units Defective Prior to December 31 November 40,000 600 December 50,000 300 Instructions (a) Determine the estimated warranty liability at December 31 for the units sold in Novem- ber and December. 11 Current Liabilities and Payroll Accounting (b) Prepare the journal entries to record the estimated liability for warranties and the costs incurred in honoring 900 warranty claims. (Assume actual costs of $14,400.) (c) Give the entry to record the honoring of 1,100 warranty contracts in January at an aver- age cost of $16.