In 2010, Payton Corporation began selling a new line of products that carry a two-year warram the estimated warranty costs related to dollar sales are as follows: First year of warranty 2% Second year of warranty 5% Sales and actual warranty expenditures for 2010 and 2011 are presented below: Sales 2010 300,000 2011 400,000 Actual Warranty Expenditures 2010 10,000 2011 20,000 What is the estimated warranty liability at the end of 2011? None of these O 29,000 19,000 O 8,000

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Chapter1: Financial Statements And Business Decisions
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In 2010, Payton Corporation began selling a new line of products that carry a two-year warranty against defects. Based upon past experience with other products,
the estimated warranty costs related to dollar sales are as follows:
First year of warranty
2%
Second year of warranty
5%
Sales and actual warranty expenditures for 2010 and 2011 are presented below:
Sales
2010
300,000
2011
400,000
Actual Warranty Expenditures
2010
10,000
2011
20,000
What is the estimated warranty liability at the end of 2011?
O None of these
O 29,000
O 19,000
O 8,000
O 49,000
Transcribed Image Text:In 2010, Payton Corporation began selling a new line of products that carry a two-year warranty against defects. Based upon past experience with other products, the estimated warranty costs related to dollar sales are as follows: First year of warranty 2% Second year of warranty 5% Sales and actual warranty expenditures for 2010 and 2011 are presented below: Sales 2010 300,000 2011 400,000 Actual Warranty Expenditures 2010 10,000 2011 20,000 What is the estimated warranty liability at the end of 2011? O None of these O 29,000 O 19,000 O 8,000 O 49,000
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