Wright Company sells merchandise with a one-year warranty. This year, sales consisted of 2,000 units. It is estimated that warranty repairs will average $15 per unit sold, and 30% of the repairs will be made this year and 70% next year. In this year's income statement, Wright should show warranty expense of
A) $9,000
B) $21,000
C) $30,000
D) $0

Question

Quizplus · Accepted Answer

Warranty expense = Sales units × Average warranty repair cost per unit sold = 2,000 units × $15 = $30,000

Wright Company Sells Merchandise with a One-Year Warranty