Question
A mechanic company sells trucks with a five year warranty against manufacturing defects. The mechanic expects that 0% of the trucks sold will prove to
A mechanic company sells trucks with a five year warranty against manufacturing defects. The mechanic expects that 0% of the trucks sold will prove to be defective in the first year after they are sole, 1% will prove to be defective in the second year, 2% will prove to be defective in the third and fourth years, and 3% will prove to be defective in the fifth year. The average cost to repair or replace a defective truck under the warranty is expected to be $40
The company's sales and warrantly costs incurred in its first five years were as follows...
2016: 7000 (trucks sold). $500 warranty plan
2017: 9000 units sold, $16 000 warranty plan
2018: 10 000 units sold, $30 000 warranty plan
2019: 12 000 units sold, $24 000 warranty plan
2020: 6000 units sold, $12 000 warranty plan
A) find the warranty expense matched to 2016 revenue and the warranty provision for 2016? ____
B) find the warranty expense matched to 2017 revenue and the warranty provision increase for 2017? ____
C) find the warranty expense matched to 2018 revenue and the warranty provision increase for 2018? ____
D) Find the balance warranty provision account on Dec. 31, 2018
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