Answer:
In year 1 the warranty expense reported is $450 ($9,000 x 5%)
Step-by-step explanation:
The journal entries would be:
Sales journal entry - August 16 - Year 1
Account Debit Credit
Cash $9,000
Cost of goods sold $4,500
Revenue $9,000
Inventory $4,500
Accrued Warranty Expense - December 31 - Year 1
Account Debit Credit
Warranty Expense $450
Estimated Warranty
Liability $450
By the end of Year 1, the company has recognized an accrued expense (an accrued expense is recognized before cash is actually paid out) for $450.