During 2021, 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, 4% 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 2021 2022 2023 Sales $400,000 1,400,000 2,400,000 $4,200,000 Actual Warranty Expenditures 4,000 26,000 110,000 $140,000 What amount should Blevert report as warranty expense for 2021? A. $36,000 B. $40,000 C. $4,000 D. $44,000
During 2021, 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, 4% 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 2021 2022 2023 Sales $400,000 1,400,000 2,400,000 $4,200,000 Actual Warranty Expenditures 4,000 26,000 110,000 $140,000 What amount should Blevert report as warranty expense for 2021? A. $36,000 B. $40,000 C. $4,000 D. $44,000
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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![During 2021, 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, 4% 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
2021
2022
2023
Sales
$400,000
1,400,000
2,400,000
$4,200,000
Actual Warranty
Expenditures
4,000
26,000
110,000
$140,000
What amount should Blevert report as warranty expense for 2021?
A. $36,000
B. $40,000
C. $4,000
D. $44,000](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F87f377c8-556b-40c3-ad73-583aac17d9d0%2Fa4dbd1a3-bb2b-4f9a-b01a-bc4b39e582bb%2Fa5vi2wo_processed.jpeg&w=3840&q=75)
Transcribed Image Text:During 2021, 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, 4% 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
2021
2022
2023
Sales
$400,000
1,400,000
2,400,000
$4,200,000
Actual Warranty
Expenditures
4,000
26,000
110,000
$140,000
What amount should Blevert report as warranty expense for 2021?
A. $36,000
B. $40,000
C. $4,000
D. $44,000
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