Potassium Corp.uses the revenue approach to account for warranties.During 2014, the company sold $500,000 worth of products, all of which carried a two year warranty (included in the price).It was estimated that 2% of the selling price represented the warranty portion, and that 60% of this related to 2014, and 40% to 2015.Assuming that Potassium incurred costs of $3,700 to service the warranties in 2015, what is the net warranty revenue (revenue minus warranty costs)for 2015?
A)$300
B)$1,300
C)$3,700
D)$4,000

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The Answer of Potassium Corp.uses the revenue approach to account for warranties.During 2014, the company sold $500,000 worth of products, all of which carried a two year warranty (included in the price).It was estimated that 2% of the selling price represented the warranty portion, and that 60% of this related to 2014, and 40% to 2015.Assuming that Potassium incurred costs of $3,700 to service the warranties in 2015, what is the net warranty revenue (revenue minus warranty costs)for 2015?
A)$300
B)$1,300
C)$3,700
D)$4,000