Best Appliance Store offers a two-year warranty on all appliances sold. The company estimates that 5% of all appliances sold need to be serviced at an average cost of $50 each. At December 31, 2020, the Warranty Liability account had a balance of $19,000. During 2021, the store spends $10,000 repairing 200 appliances. An additional 3,500 appliances are sold in 2021. On the 2021 income statement, warranty expense will be: Oa. $8,750 b. $10,000 c. $8,500
Best Appliance Store offers a two-year warranty on all appliances sold. The company estimates that 5% of all appliances sold need to be serviced at an average cost of $50 each. At December 31, 2020, the Warranty Liability account had a balance of $19,000. During 2021, the store spends $10,000 repairing 200 appliances. An additional 3,500 appliances are sold in 2021. On the 2021 income statement, warranty expense will be: Oa. $8,750 b. $10,000 c. $8,500
Cornerstones of Financial Accounting
4th Edition
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Jay Rich, Jeff Jones
Chapter8: Current And Contingent Liabilities
Section: Chapter Questions
Problem 56BE
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![Best Appliance Store offers a two-year warranty on all appliances sold. The company estimates that
5% of all appliances sold need to be serviced at an average cost of $50 each. At December 31, 2020,
the Warranty Liability account had a balance of $19,000. During 2021, the store spends $10,000
repairing 200 appliances. An additional 3,500 appliances are sold in 2021. On the 2021 income
statement, warranty expense will be:
O a. $8,750
b. $10,000
C. $8,500
d. $9,000](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F560e97fe-dc72-47a1-9e7e-6746803c7e1d%2F429b5ea6-ffdc-42a0-b851-7c8db9500081%2F46km1g9b_processed.png&w=3840&q=75)
Transcribed Image Text:Best Appliance Store offers a two-year warranty on all appliances sold. The company estimates that
5% of all appliances sold need to be serviced at an average cost of $50 each. At December 31, 2020,
the Warranty Liability account had a balance of $19,000. During 2021, the store spends $10,000
repairing 200 appliances. An additional 3,500 appliances are sold in 2021. On the 2021 income
statement, warranty expense will be:
O a. $8,750
b. $10,000
C. $8,500
d. $9,000
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