Question
During 2020, Gold Flash Co. introduced a new product carrying a two-year warranty against defects. The estimated warranty costs related to dollar sales are 2%
During 2020, Gold Flash Co. introduced a new product carrying a two-year warranty against defects. The estimated warranty costs related to dollar sales are 2% within 12 months following sale and 4% in the second 12 months following sale. Sales and actual warranty expenditures for the years ended December 31, 2020 and 2021 are as follows:
- 2020: Sales = $800,000; Actual Warranty Expenditures = $10,000
- 2021: Sales = $1,000,000; Actual Warranty Expenditures = $30,000
At December 31, 2021, Gold Flash Co. should report an estimated warranty liability of:
| A. | $25,000 | |
| B. | $35,000 | |
| C. | $61,000 | |
| D. | $68,000 |
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Introduction To Business Statistics
Authors: Ronald M. Weiers
7th Edition
978-0538452175, 538452196, 053845217X, 2900538452198, 978-1111524081
