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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

image text in transcribed
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 so

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