Correct calculator company offers a one year warranty on its products. During 20
ID: 2372825 • Letter: C
Question
Correct calculator company offers a one year warranty on its products. During 2000, it sold 80,000 calculators and estimates ten percent will be returned for warranty service. The average cost to repair a product is $10. During 2000, 7,500 caluculators were repaired.
1) What is the year end balance of warranty expense?
a) $75,000
b) $80,000
c) $5,000
d) None of the above
2) What is the year end balance of estimated warranty liability?
a) $5,000
b) $80,000
c) $75,000
D) none of the above
3) where will estimated warranty liability be reported on the balance sheet?
Explanation / Answer
1. $75,000
2.a) $5,000