Hollingsworth Industries introduced a new line of ceiling fans in 20x1 that carry a two-year warranty against manufacturer's defects. Management estimated that warranty costs were expected to approximate 6% of sales revenue. First-year sales of the fans were $370,000. An evaluation of the company's claims experience in late 20x2 indicated that actual claims were less than expected-5% of sales rather than 6%. Sales of the fans were $420,000 in 20x2. What is the 20x2 warranty expense? Warranty expense
Hollingsworth Industries introduced a new line of ceiling fans in 20x1 that carry a two-year warranty against manufacturer's defects. Management estimated that warranty costs were expected to approximate 6% of sales revenue. First-year sales of the fans were $370,000. An evaluation of the company's claims experience in late 20x2 indicated that actual claims were less than expected-5% of sales rather than 6%. Sales of the fans were $420,000 in 20x2. What is the 20x2 warranty expense? Warranty expense
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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
Transcribed Image Text:Hollingsworth Industries introduced a new line of ceiling fans in 20x1 that carry a two-year warranty against manufacturer's defects.
Management estimated that warranty costs were expected to approximate 6% of sales revenue. First-year sales of the fans were
$370,000. An evaluation of the company's claims experience in late 20x2 indicated that actual claims were less than expected-5% of
sales rather than 6%.
Sales of the fans were $420,000 in 20x2. What is the 20x2 warranty expense?
Warranty expense
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