In 2024, Carla Vista 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 2% of sales in the year of the sale, 3% in the year after the sale, and 4% in the second year after the sale. Sales revenue and actual warranty expenditures for the first three year period were as follows: (assume the accrual method) Sales Revenue Actual Warranty Expenditures 2024 $1598000 $41000 2025 2496000 66000 2026 2107000 136000 $6201000 $243000 What amount should Carla Vista report as a liability under the warranty at December 31, 2026? $84280 $72080 $315090 0 $0
In 2024, Carla Vista 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 2% of sales in the year of the sale, 3% in the year after the sale, and 4% in the second year after the sale. Sales revenue and actual warranty expenditures for the first three year period were as follows: (assume the accrual method) Sales Revenue Actual Warranty Expenditures 2024 $1598000 $41000 2025 2496000 66000 2026 2107000 136000 $6201000 $243000 What amount should Carla Vista report as a liability under the warranty at December 31, 2026? $84280 $72080 $315090 0 $0
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter22: Accounting For Changes And Errors.
Section: Chapter Questions
Problem 10E
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![In 2024, Carla Vista 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 2% of sales in the year of the sale, 3% in the year after the sale, and 4% in the
second year after the sale. Sales revenue and actual warranty expenditures for the first three year period were as follows: (assume the
accrual method)
Sales Revenue
Actual
Warranty
Expenditures
2024
$1598000
$41000
2025
2496000
66000
2026
2107000
136000
$6201000
$243000
What amount should Carla Vista report as a liability under the warranty at December 31, 2026?
$84280
$72080
$315090
0 $0](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F1485feca-3900-45a9-9ec3-8ef07e8f10eb%2F0ef71fd0-4560-410d-84f8-a06b8fd1f705%2F0vqc0x_processed.jpeg&w=3840&q=75)
Transcribed Image Text:In 2024, Carla Vista 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 2% of sales in the year of the sale, 3% in the year after the sale, and 4% in the
second year after the sale. Sales revenue and actual warranty expenditures for the first three year period were as follows: (assume the
accrual method)
Sales Revenue
Actual
Warranty
Expenditures
2024
$1598000
$41000
2025
2496000
66000
2026
2107000
136000
$6201000
$243000
What amount should Carla Vista report as a liability under the warranty at December 31, 2026?
$84280
$72080
$315090
0 $0
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