Current Attempt in Progress Renew Energy Ltd. (REL) manufactures and sells directly to customers a special long-lasting rechargeable battery for use in digital electronic equipment. Each battery sold comes with a guarantee that the company will replace free of charge any battery that is found to be defective within six months from the end of the month in which the battery was sold. On June 30, 2020, the Warranty Liability account had a balance of $45,000, but by December 31, 2020, this amount had been reduced to $5,000 by charges for batteries returned. REL has been in business for many years and has consistently experienced an 8% return rate. However, effective October 1, 2020, because of a change in the manufacturing process, the rate increased to a total of 10%. Each battery is stamped with a date at the time of sale so that REL has developed information on the likely pattern of returns during the six-month period, starting with the month following the sale. (Assume no batteries are returned in the month of sale.) Month Following Sale % of Total Returns Expected in the Month 1st 20% 2nd 30% 3rd 20% 4th 10% 5th 10% 6th 10% 100% For example, for January sales, 20% of the returns are expected in February, 30% in March, and so on. Sales of these batteries for the second half of 2020 were: Month Sales Amount July $ 1,800,000 August 1,700,000 September 2,000,000 October 1,400,000 November 1,100,000 December 800,000 REL's warranty also covers the payment of the freight cost on defective batteries returned and on new batteries sent as replacements. This freight cost is 10% of the sales price of the batteries returned. The manufacturing cost of a battery is roughly 60% of its sales price, and the salvage value of the returned batteries averages 14% of the sales price. Assume that REL follows IFRS and that it uses the expense approach to account for warranties. Part 1 X Your answer is incorrect. Calculate the warranty expense that will be reported for the July 1 to December 31, 2020 period. Warranty Expense $ 242,744 e Textbook and Media Save for Later Attempts: 1 of 2 used Submit