Question 1 Part A and B

A. At the beginning of 2018, Angel Corporation began offering a two-year warranty on its products. The warranty program was expected to cost Angel 6% of net sales. Net sales made under warranty in 2018 were $192 million. Fifteen percent of the units sold were returned in 2018 and repaired or replaced at a cost of $4.90 million. The amount of warranty expense on Angel's 2018 income statement is:

Multiple Choice

• $28.80 million.

• $14.92 million.

• $4.90 million.

• $11.52 million.

B. Panther Co. had a quality-assurance warranty liability of $355,000 at the beginning of 2018 and $308,000 at the end of 2018. Warranty expense is based on 4% of sales, which were $59 million for the year. What were the warranty expenditures for 2018?

Multiple Choice

• $2,407,000.

• $0.

• $2,313,000.

• $2,360,000.