Q9-56. Aphrodite, Inc., manufactures and sells computer monitors with a three-year warranty.

When calculated using the expected value approach, Aphrodite found that expected warranty costs are roughly equal to about 6% of sales during the warranty period. The following table shows the sales and actual warranty payments during the first two years of operations:

Based on these facts, what amount of warranty liability should Aphrodite, Inc., report on its Balance Sheet at December 31, 20X1?

a. $30,000

c. $38,850

b. $33,150

d. $72,000

Transcribed Image Text:

Year Sales Warranty Payments 20X0 $450,000 $ 3,150 20X1 750,000 30,000