During 2020,Hans Electronics sold 350 microwaves each at $1,050 per unit.Each microwave has one-year warranty.Hans estimates it will cost them $82 per unit,if a unit is brought in under warranty for repair.During 2020,Smith spent $17,500 on warranty costs for the appliances sold in 2020.At the end of the 2020 the warranty liability and the warranty expense related to these sales would be

Question

Quizplus · Accepted Answer

The warranty expense is calculated based on the estimated cost per unit ($82) multiplied by the total units sold (350), which equals $28,700. Since Hans Electronics spent $17,500 on warranty costs during 2020, the remaining warranty liability at the end of 2020 is the difference between the total estimated warranty expense ($28,700) and the actual warranty costs incurred ($17,500), which equals $11,200. Therefore, the warranty expense for 2020 is $17,500, and the remaining warranty liability is $11,200.

During 2020,Hans Electronics Sold 350 Microwaves Each at $1,050 Per