• Allan Company had sales of $1,500,000 during 2021. Actual warranty costs during 2021 were $60,000. Allan estimates that total warranty costs will be 12% of sales. Assuming a zero balance in warranties at the beginning of the year, the balance in estimated warranty liability on 12/31/21 will be: O $60,000 O $180,000 O $140,000 O $120,000

• Allan Company had sales of $1,500,000 during 2021. Actual warranty costs during 2021 were $60,000. Allan estimates that total warranty costs will be 12% of sales. Assuming a zero balance in warranties at the beginning of the year, the balance in estimated warranty liability on 12/31/21 will be: O $60,000 O $180,000 O $140,000 O $120,000

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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Question

• Allan Company had sales of $1,500,000 during 2021. Actual warranty costs during 2021 were
$60,000. Allan estimates that total warranty costs will be 12% of sales. Assuming a zero balance
in warranties at the beginning of the year, the balance in estimated warranty liability on
12/31/21 will be:
$60,000
O $180,000
O $140,000
O $120,000

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