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Fox Co. sold 1,200,000 lighters in 20x9, and estimates that 18,000 of them will be defective, but only 75% will be returned. During 20x9, 12,000
Fox Co. sold 1,200,000 lighters in 20x9, and estimates that 18,000 of them will be defective, but only 75% will be returned. During 20x9, 12,000 lighters were replaced under the warranty, and Foxs cost to replace a returned lighter is $4.50. The balance in Foxs warranty liability at December 31, 20x8 was $5,500. What is the warranty liability on Foxs on December 31, Year 20x9 balance sheet?
a.$66,250
b.$12,250
c.$60,750
d.$6,750
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