Question
In 2024, Blossom Co. introduced a new line of machines that carry a three-year warranty against manufacturer's defects. Based on industry experience, warranty costs
In 2024, Blossom Co. introduced a new line of machines that carry a three-year warranty against manufacturer's defects. Based on industry experience, warranty costs are estimated at 2% of sales in the year of the sale, 3% in the year after the sale, and 4% in the second year after the sale. Sales revenue and actual warranty expenditures for the first three year period were as follows: (assume the accrual method) Actual Warranty Expenditures Sales Revenue 2024 $1590000 $37000 2025 2490000 63000 2026 2090000 133000 $6170000 $233000 What amount should Blossom report as a liability under the warranty at December 31, 2026? O $69400 $322300 $83600 $0
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