3. Jansen Company sells a product for $400 per unit, which includes a 30-day warranty against product defects. Experience indicates that four percent of the units sold will prove defective, requiring an average repair cost of $50 per unit. During the first month of business, product sales were $320,000, and 20 of the units sold were found to be defective and repaired during the month. What is the accrued liability for product warranties at month-end? a $1,000 b. $600 c. $1,600 4 $2,000

3. Jansen Company sells a product for $400 per unit, which includes a 30-day warranty against product defects. Experience indicates that four percent of the units sold will prove defective, requiring an average repair cost of $50 per unit. During the first month of business, product sales were $320,000, and 20 of the units sold were found to be defective and repaired during the month. What is the accrued liability for product warranties at month-end? a $1,000 b. $600 c. $1,600 4 $2,000

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

3. Jansen Company sells a product for $400 per unit, which includes a 30-day warranty against
product defects. Experience indicates that four percent of the units sold will prove defective,
requiring an average repair cost of $50 per unit. During the first month of business, product sales
were $320,000, and 20 of the units sold were found to be defective and repaired during the month.
What is the accrued liability for product warranties at month-end?
a $1,000
b. $600
c. $1,600
d. $2,000

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