Reference no: EM132785315

Rogers sells equipment which comes with no warranty. However, customers can purchase a two year warranty separately for 10% of the selling price. In 2012 Rogers sold $900,000 ofequipment and one-third of the customers purchased the warranty.

Rogers estimates the cost to service the warranties = 3,600

During 2012, Rogers incurred warranty costs = 2,915

problem 1: Using the revenue method, on ending balance sheet for 2012 Rogers should record:

a] Warranty liability of 3,500.00

b] Warranty liability of 684.00

c] Unearned warranty revenue of 30,000.00

d] Unearned warranty revenue of 5,200.00