During 2015,Blevert Co.introduced a new line of machines that carry a three-year warranty against manufacturer's defects.Based on industry experience,warranty costs are estimated at 1% of sales in the year of sale,3% in the year after sale,and 5% in the second year after sale.Sales and actual warranty expenditures for the first three-year period were as follows: What amount should Blevert report as a liability at December 31,2017?
A)$11,000
B)$20,000
C)$125,000
D)$224,000

Question

During 2015,Blevert Co.introduced a new line of machines that carry a three-year warranty against manufacturer's defects.Based on industry experience,warranty costs are estimated at 1% of sales in the year of sale,3% in the year after sale,and 5% in the second year after sale.Sales and actual warranty expenditures for the first three-year period were as follows:  What amount should Blevert report as a liability at December 31,2017?
A)$11,000 
B)$20,000 
C)$125,000 
D)$224,000

Quizplus · Accepted Answer

The Answer of During 2015,Blevert Co.introduced a new line of machines that carry a three-year warranty against manufacturer's defects.Based on industry experience,warranty costs are estimated at 1% of sales in the year of sale,3% in the year after sale,and 5% in the second year after sale.Sales and actual warranty expenditures for the first three-year period were as follows:  What amount should Blevert report as a liability at December 31,2017?
A)$11,000 
B)$20,000 
C)$125,000 
D)$224,000