The company estimated annual warranty expense of 2% of annual net sales. The net sales for the current year amount to 4,000,000. At the beginning of current year, the warranty liability was 60,000 and the warranty payments during the current year totaled 50,000.

The company estimated annual warranty expense of 2% of annual net sales. The net sales for the current year amount to 4,000,000. At the beginning of current year, the warranty liability was 60,000 and the warranty payments during the current year totaled 50,000.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

1. What is the warranty expense for the current year
a. 70,000 c. 80,000
b. 50,000 d. 60,000

2. What is the warranty liability at year end?
a. 10,000 c. 80,000
b. 70,000 d. 90,000

The company estimated annual warranty expense of 2% of annual net sales. The net sales for the current year
amount to 4,000,000.
At the beginning of current year, the warranty liability was 60,000 and the warranty payments during the
current year totaled 50,000.

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