Question
Exhibit 9-4 During 2020, the Thomas Company began selling a new type of machine that carries a two-year assurance-type warranty against all defects. Based on
Exhibit 9-4\ During 2020, the Thomas Company began selling a new type of machine that carries a two-year assurance-type warranty against all defects. Based on past industry and company experience, estimated warranty costs should total
$2,000
per machine sold. During 2020 , sales and actual warranty expenditures were
$4,000,000
( 80 machines) and
$44,000
, respectively. Thomas uses the GAAP approach of accruing warranty expense (and the relate liability) in the year of the sale.\ Refer to Exhibit 9-4. What amount should Thomas report as its warranty expense for 2020?\
$44,000
\
$320,000
\
$160,000
\ $0
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started