Use the following information for questions:
Direct Sales Inc.offers a two-year warranty against failure of its products.The estimated liability is 4% of sales in the year of sale and 6% in the second year.Sales for 2010 and 2011 were: $2,500,000 and $2,800,000, respectively.They incurred no warranty costs in 2010 but in 2011 they spent $175,000 on repairs related to the warranties from 2010 and 2011.
-The warranty liability as at the year-end 2010 was:
A)$0
B)$100,000
C)$150,000
D)$250,000

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The Answer of Use the following information for questions:
Direct Sales Inc.offers a two-year warranty against failure of its products.The estimated liability is 4% of sales in the year of sale and 6% in the second year.Sales for 2010 and 2011 were: $2,500,000 and $2,800,000, respectively.They incurred no warranty costs in 2010 but in 2011 they spent $175,000 on repairs related to the warranties from 2010 and 2011.
-The warranty liability as at the year-end 2010 was:
A)$0
B)$100,000
C)$150,000
D)$250,000

Use the Following Information for Questions