Final answer:
The cost of a warranty is recognized at the time of sale, with a debit to Warranty Expense and a credit to Warranty Liability.
Step-by-step explanation:
The cost of a quality-assurance warranty is recognized during the year of sale and debited to Warranty Expense and credited to Warranty Liability. When a seller offers a warranty or a service contract, they are making a promise to repair or replace the product if necessary within a specified time frame. Accounting for these costs involves recording the expense when the sale occurs and the product is delivered, not when the service under the warranty or contract is actually performed.