During 2006, Younger 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 2% of sales in the year of sale, 4% in the year after sale, and 6% in the second year after sale.Sales and actual warranty expenditures for the first three-year period were as follows: What amount should Younger report as a liability at December 31, 2008?
A)$0
B)$15,000
C)$204,000
D)$315,000

Question

During 2006, Younger 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 2% of sales in the year of sale, 4% in the year after sale, and 6% in the second year after sale.Sales and actual warranty expenditures for the first three-year period were as follows:   What amount should Younger report as a liability at December 31, 2008?
A)$0 
B)$15,000 
C)$204,000 
D)$315,000

Quizplus · Accepted Answer

The Answer of During 2006, Younger 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 2% of sales in the year of sale, 4% in the year after sale, and 6% in the second year after sale.Sales and actual warranty expenditures for the first three-year period were as follows:   What amount should Younger report as a liability at December 31, 2008?
A)$0 
B)$15,000 
C)$204,000 
D)$315,000