In 2006, Slimon Corporation began selling a new line of products that carry a two-year warranty against defects.Based upon past experience with other products, the estimated warranty costs related to dollar sales are as follows: First year of warranty $\quad 2 \%$
Second year of warranty $\quad 5 \%$ Sales and actual warranty expenditures for 2006 and 2007 are presented below: $$\begin{array} { l r r }
& { 2006 } &{ 2007 } \\hline
\text { Sales } & \$ 300,000 & \$ 400,000 \
\text { Actual warranty expenditures }&10,000 & 20,000
\end{array}$$ What is the estimated warranty liability at the end of 2007?

Question

In 2006, Slimon Corporation began selling a new line of products that carry a two-year warranty against defects.Based upon past experience with other products, the estimated warranty costs related to dollar sales are as follows: First year of warranty $\quad 2 \%$
Second year of warranty $\quad 5 \%$ Sales and actual warranty expenditures for 2006 and 2007 are presented below: $$\begin{array} { l r r } 
 &  { 2006 } &{ 2007 } \\hline
\text { Sales } & \$ 300,000 & \$ 400,000 \
\text { Actual warranty expenditures }&10,000 & 20,000
\end{array}$$ What is the estimated warranty liability at the end of 2007?

Quizplus · Accepted Answer

The Answer of In 2006, Slimon Corporation began selling a new line of products that carry a two-year warranty against defects.Based upon past experience with other products, the estimated warranty costs related to dollar sales are as follows: First year of warranty $\quad 2 \%$
Second year of warranty $\quad 5 \%$ Sales and actual warranty expenditures for 2006 and 2007 are presented below: $$\begin{array} { l r r } 
 &  { 2006 } &{ 2007 } \\hline
\text { Sales } & \$ 300,000 & \$ 400,000 \
\text { Actual warranty expenditures }&10,000 & 20,000
\end{array}$$ What is the estimated warranty liability at the end of 2007?

In 2006, Slimon Corporation Began Selling a New Line of Products