Analyzing-computing accrued warranty liability and expense

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Reference no: EM131615833

Analyzing and Computing Accrued Warranty Liability and Expense

Waymire Company sells a motor that carries a 60-day unconditional warranty against product failure. From prior years' experience, Waymire estimates that 2% of units sold each period will require repair at an average cost of $100 per unit. During the current period, Waymire sold 68,000 units and repaired 1,000 units.

(a) How much warranty expense must Waymire report in its current period income statement?

(b) What warranty liability related to current period sales will Waymire report on its current period-end balance sheet? (Hint: Remember that some units were repaired in the current period.)

Reference no: EM131615833

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