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During Year 3, a new product carrying a 2-year warranty against defects was introduced. The estimated warranty costs related to dollar sales are 2% within
During Year 3, a new product carrying a 2-year warranty against defects was introduced. 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, Year 3 and Year 4, are as follows: Actual Warranty Sales Expenditures Year 3 $ 600,000 $9,000 Year 4 1,000,000 30,000 $1,600,000 $39,000 At December 31, Year 4. what amount of estimated warranty liability should be reported? O A. $96,000 O B. $57,000 OC. $39,000 OD. $0
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