Problem 6-13 Henry's Lawn Equipment sells high-quality lawn mowers and offers a 3-year warranty on all new lawn mowers sold. In 2017, Henry sold $289,800 of new specialty mowers for golf greens for which Henry's service department does not have the equipment to do the service. Henry has entered into an agreement with Moer Mavens to provide all warranty service on the special mowers sold in 2017. Henry wishes to measure the fair value of the agreement to determine the warranty liability for sales made in 2017. The controller for Henry's Lawn Equipment estimates the following expected warranty cash outflows associated with the mowers sold in 2017 Cash Flow Probability Year Estimate $2,570 3,960 5,000 Assessment 20% 60% 20% 2018 30% 50% 20% 2019 $2,700 4,990 6,340 2020 $3,900 5,480 7,310 30% 40% 30% Click here to view factor tables Using expected cash flow and present value techniques, determine the value of the warranty liability for the 2017 sales. Use an annual discount rate of 6%. Assume all cash flows occur at the end of the year. (Round factor values to 5 decimal places, e.g. 1.25124 and final answer to 0 decimal places, e.g. 458,581.) Problem 6-13 Henry's Lawn Equipment sells high-quality lawn mowers and offers a 3-year warranty on all new lawn mowers sold. In 2017, Henry sold $289,800 of new specialty mowers for golf greens for which Henry's service department does not have the equipment to do the service. Henry has entered into an agreement with Moer Mavens to provide all warranty service on the special mowers sold in 2017. Henry wishes to measure the fair value of the agreement to determine the warranty liability for sales made in 2017. The controller for Henry's Lawn Equipment estimates the following expected warranty cash outflows associated with the mowers sold in 2017 Cash Flow Probability Year Estimate $2,570 3,960 5,000 Assessment 20% 60% 20% 2018 30% 50% 20% 2019 $2,700 4,990 6,340 2020 $3,900 5,480 7,310 30% 40% 30% Click here to view factor tables Using expected cash flow and present value techniques, determine the value of the warranty liability for the 2017 sales. Use an annual discount rate of 6%. Assume all cash flows occur at the end of the year. (Round factor values to 5 decimal places, e.g. 1.25124 and final answer to 0 decimal places, e.g. 458,581.)