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Electrolux company sells microwave ovens that carry a three year warranty against product defects. Based on the company experience, warranty costs were estimated at P240 per microwave oven. During 2020, the company sold 24,000 microwave ovens and paid warranty costs amounting to P1,360,000.
Question 1: Warranty expense in 2020
Question 2: Liability for warranty on December 31, 2020
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