Solution-Compute the warranty provision at the year end

Compute the warranty provision at the year end

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Question - Ruby's & Rings Inc. offers a two-year assurance warranty against failure of its products. The estimated liability is 4% of sales in the year of sale and 6% in the second year. Sales for 2020 and 2021 were: $2,500,000 and $2,800,000, respectively. The company incurred no warranty costs in 2020 but in 2021 they spent $175,000 on repairs related to the warranties issued 2020 and 2021. Compute the warranty provision at the 2020 year end?

Reference no: EM132526956

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Compute the warranty provision at the year end

Reference no: EM132526956

Reference no: EM132526956

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