During 2015, Blevert 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 1% of sales in the year of sale, 3% in the year after sale, and 5% in the second year after sale. Sales and actual warranty expenditures for the first three-year period were as follows:
Sales
Actual Warranty Expenditures
2015
$500,000
$6,000
2016
1,500,000
25,000
2017
2,000,000
105,000
$4,000,000
$136,000
What amount should Blevert report as a liability at December 31, 2017?
A) $11,000
B) $20,000
C) $125,000
D) $224,000
Answer: D
Business
You might also like to view...
A strong leader does not share aspects of his or her company's financial health, its future plans, or her vision for it with employees
Indicate whether the statement is true or false
Business
Social media metrics are important because it allows a brand to modify social media marketing strategies during a campaign
Indicate whether the statement is true or false
Business