144) During its first year of operations Keene Limited had sales of $76,500. The company offers a 2- year limited warranty on all sales and expects that warranty costs for the first year will average...

144) During its first year of operations Keene Limited had sales of $76,500. The company offers a 2- year limited warranty on all sales and expects that warranty costs for the first year will average 0.5% of sales with an additional 1.5% in the second year. During the current year the company spent $1,200 on warranty repairs.

Required:

1. Prepare all journal entries related to the warranty for the current year.

2. How will the warranty liability be reported on the company's year-end balance sheet?

145) What are the most significant liabilities for airlines? Discuss the accounting treatment of these liabilities.

146) Describe the two interest rates included in setting the price of a bond.