Oak, Co. offer a three-year warranty on its products. Oak previously estimated warranty cost to be 2% of sales. Due to a technological advance in production at the beginning of year 3, Oak now believes 1% of sales to be a better estimate of warranty costs. warranty costs of $80,000 and $ 96,000 were reported in year 1 and year 2, respectively. Sales for year 3 were $5,000,000. what amount should be disclosed in Oak's Year 3 financial statements as warranty expense? a. $ 50,000 b. $ 88,000 c. $ 100,000 d. $ 138,000

Oak, Co. offer a three-year warranty on its products. Oak previously estimated warranty cost to be 2% of sales. Due to a technological advance in production at the beginning of year 3, Oak now believes 1% of sales to be a better estimate of warranty costs. warranty costs of $80,000 and $ 96,000 were reported in year 1 and year 2, respectively. Sales for year 3 were $5,000,000. what amount should be disclosed in Oak's Year 3 financial statements as warranty expense? a. $ 50,000 b. $ 88,000 c. $ 100,000 d. $ 138,000

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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