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During 2019, Swifty Corporation introduced a new line of machines that carry a three-year warranty against manufacturers defects. Based on industry experience, warranty costs are
During 2019, Swifty Corporation introduced a new line of machines that carry a three-year warranty against manufacturers defects. Based on industry experience, warranty costs are estimated at 2% of sales in the year of sale, 3% in the year after sale, and 4% in the second year after sale. Sales and actual warranty expenditures for the first three-year period were as follows: (assume the accrual method)
Sales | Actual Warranty Expenditures | |||
2019 | $1604000 | $38000 | ||
2020 | 2506000 | 66000 | ||
2021 | 2103000 | 134000 | ||
$6213000 | $238000 |
What amount should Swifty report as a liability at December 31, 2021?
$69840
$321170
$0
$84120
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