eBook

Question Content Area

Cornerstone Exercise 8-32 (Algorithmic) Warranties

In 2019, Jammer Jumps sold 100 bounce houses at $5,000 each. The bounce houses carry a 5-year warranty for defects. Jammer estimates that repair costs will average 4% of the total selling price. The estimated warranty liability at the beginning of the year was $42,000. Claims of $11,000 were actually incurred during the year to honor their warranties.

Required:

What was the balance in the warranty liability account at the end of the year?