Intermediate Accounting
9th Edition
ISBN: 9781259722660
Author: J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher: McGraw-Hill Education
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Chapter 20, Problem 20.7BE
Warranty expense
• LO20–4
In 2017, Quapau Products introduced a new line of hot water heaters that carry a one-year warranty against manufacturer’s defects. Based on industry experience, warranty costs were expected to approximate 5% of sales revenue. First-year sales of the heaters were $300,000. An evaluation of the company’s claims experience in late 2018 indicated that actual claims were less than expected—4% of sales rather than 5%. Assuming sales of the heaters in 2018 were $350,000 and warranty expenditures in 2018 totaled $12,000, what is the 2018 warranty expense?
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Chapter 20 Solutions
Intermediate Accounting
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