RoboticsRUs started the year 2022 with $19,500 of warranties payable. During 2022 the firm spent $17,000 in cash to satisfy warranty claims. RoboticsRUs made $160,000 of sales in 2022 and it estimates that future warranty costs are 10% of sales.

a. Show the financial statement effects of warranty claims satisfaction and of warranty expense recognition in 2022.

Assets	=	Liabilities	+	Equity		Sales	-	Expenses	=	Profit

b. What is the value of Warranty Payable reported on the 2022 Balance Sheet?

c. If in 2023 RoboticsRUs unexpectedly experiences much higher warranty claims filed than the 10% anticipated, what would we expect to see on their 2023 Income Statement?

1. 2023 Warranty Expense equal to less than 10% of sales
2. 2023 Warranty Expense equal to 10% of sales
3. 2023 Warranty Expense equal to more than 10% of sales