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McKay Company sells merchandise with a 1-year warranty. In Year 1, sales consisted of 1,200 units. It is estimated that warranty repairs will average $10
McKay Company sells merchandise with a 1-year warranty. In Year 1, sales consisted of 1,200 units. It is estimated that warranty repairs will average $10 per unit sold, and 30% of the repairs will be made in Year 1 and 70% in Year 2. On the Year 1 income statement, McKay should show warranty expense of
a. $8,400
b. $3,600
c. $0
d. $12,000
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