In 2018, Dubious company began selling 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 peso sales are as follows: First year of warranty 2% 2nd year of warranty 5% Sales and actual
In 2018, Dubious company began selling 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 peso sales are as follows: First year of warranty 2% 2nd year of warranty 5% Sales and actual
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 57BE
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- In 2018, Dubious company began selling 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 peso sales are as follows:
First year of warranty 2%
2nd year of warranty 5%
Sales and actual warranty expenditures are presented below:
2018 2019
Sales 5,000,000 7,000,000
Actual warranty costs 100,000 300,000
What is the estimated warranty liability on Dec. 31, 2019?
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