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Question - Nags Head Corporation began manufacturing and selling a small appliance at the start of 2021.
Each appliance sells for $300 and comes with an 18-month assurance-type warranty.
During 2021, 10,000 appliances were sold
During estimates 3% of these will be repaired within the warranty period at a cost of $40 each.
During 2021, 100 units were repaired at a cost of $40 each.
After preparing the adjusting entries at the end of its fiscal year end on December 31, 2021, what should be the "Estimated Warranty Liability" account balance?
a. 8,000
b. 86,000
c. 4,000
d. 12,000
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