In 2019, Shiftry Corporation began selling a new line of products that carry a two-year warranty against defects. Based upon past experience with other products, the estimated warranty costs related to peso sales are as follows: First year of warranty 2% Second year of warranty 5% Sales and actual expenditures for 2019 and 2020 are presented below: 2019 2020 Sales 450,000 600,000 Actual warranty expenditures 15,000 30,000 What is the estimated warranty liability at the end of 2020?
In 2019, Shiftry Corporation began selling a new line of products that carry a two-year warranty against defects. Based upon past experience with other products, the estimated warranty costs related to peso sales are as follows: First year of warranty 2% Second year of warranty 5% Sales and actual expenditures for 2019 and 2020 are presented below: 2019 2020 Sales 450,000 600,000 Actual warranty expenditures 15,000 30,000 What is the estimated warranty liability at the end of 2020?
Cornerstones of Financial Accounting
4th Edition
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Jay Rich, Jeff Jones
Chapter8: Current And Contingent Liabilities
Section: Chapter Questions
Problem 57BE
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In 2019, Shiftry Corporation began selling a new line of products that carry a two-year warranty against defects. Based upon past experience with other products, the estimated warranty costs related to peso sales are as follows:
First year of warranty 2%
Second year of warranty 5%
Sales and actual expenditures for 2019 and 2020 are presented below:
|
|
2019 |
2020 |
|
Sales |
450,000 |
600,000 |
|
Actual warranty expenditures |
15,000 |
30,000 |
What is the estimated warranty liability at the end of 2020?
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