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During 2017, Alton Co. introduced a new product carrying a two-year warranty against defects. The estimated warranty costs related to dollar sales are 4% within
During 2017, Alton Co. introduced a new product carrying a two-year warranty against defects. The estimated warranty costs related to dollar sales are 4% within 12 months following sale and 8% in the second 12 months following sale. Sales and actual warranty expenditures for the years ended December 31, 2018 and 2017 are as follows: Actual Warranty Sales S 800,000 1,000,000 $1,800,000 Expenditures $24,000 60,000 2017 2018 $8 4,000 At December 31, 2018, Alton should report an estimated warranty liability of a. $0 b. $36,000. c. $60,000. d. $132,000
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