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CMI sells a product that carries a three - year warranty. Estimated warranty costs as percentage of sales are 1 % in the first year
CMI sells a product that carries a threeyear warranty. Estimated warranty costs as percentage of
sales are in the first year of warranty, in the second, and in the third. Sales and actual
warranty claims for the years ended December through are as follows:
Sales
Actual
Warranty
Claims
$ $
What is the warranty expense in Show your work.
Suppose the beginning balance in the warranty reserve liability account on January
was $ What amount should CMI report as its warranty liability on its December
balance sheet? Show your work.
Is warranty a contingent liability? Explain.
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