In 2013, Waldo Balloons sold 50 hot air balloons at $25,000 each. The balloons carry a 5-year warranty for defects. Waldo estimates that repair costs will average 3% of the total selling price. The estimated warranty liability at the beginning of the year was $40,000. Claims of $15,000 were actually incurred during the year to honor their warranties. Required: What was the balance in the warranty liability account at the end of the year?$
In 2013, Waldo Balloons sold 50 hot air balloons at $25,000 each. The balloons carry a 5-year warranty for defects. Waldo estimates that repair costs will average 3% of the total selling price. The estimated warranty liability at the beginning of the year was $40,000. Claims of $15,000 were actually incurred during the year to honor their warranties. Required: What was the balance in the warranty liability account at the end of the year?$
Cornerstones of Financial Accounting
4th Edition
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Jay Rich, Jeff Jones
Chapter8: Current And Contingent Liabilities
Section: Chapter Questions
Problem 57BE
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In 2013, Waldo Balloons sold 50 hot air balloons at $25,000 each. The balloons carry a 5-year warranty for defects. Waldo estimates that repair costs will average 3% of the total selling price. The estimated warranty liability at the beginning of the year was $40,000. Claims of $15,000 were actually incurred during the year to honor their warranties.
Required:
What was the balance in the warranty liability account at the end of the year?
$
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