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IU. LO.3) During 2016 Wannstedt Co. introduced a new line of machines that carry a three-year warranty against manufacturer's defects. Based on industry experience, warranty
IU. LO.3) During 2016 Wannstedt 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 sale, 4% in the year after sale, and 6% in the second year after sale. Sales and actual warranty expenditures for the first three-year period were as follows Actual Warranty Expenditures Sales 2016 2017 2018 $200,000 $3,000 500,000 15,000 45.000 700,000 $1,400,000 $63.000 What amount should Wannstedt report as a liability for this assura warranty at December 31, 2018? A. $0 B. $5,000 C. $68,000 D. $105,000
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