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What amount should Waterway report as liability at December

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Question - During 2019, Waterway Industries 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 sale, 3% in the year after sale, and 4% in the second year after sale. Sales and actual warranty expenditures for the first three-year period were as follows: (assume the accrual method)

 

Sales

Actual Warranty Expenditures

2019

$1591000

$41000

2020

2505000

66000

2021

2101000

133000

 

$6197000

$240000

Required - What amount should Waterway report as a liability at December 31, 2021?

a. $84040

b. $317730

c. $69360

d. $0

Reference no: EM132664938

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