Kenneth Mole Company sold $10,000 worth of luggage with a one-year warranty. The company estimates that 2% of the sales will result in warranty payout. Kenneth Mole Company should

Question

Quizplus · Accepted Answer

The best choice is to recognize warranty expense and warranty liability at the time of sale. This is because the warranty is offered at the time of sale and is a cost of the sale. The warranty liability is also recognized at the time of sale as it represents the obligation of the company to perform warranty work in the future. Therefore, both the expense and liability should be recognized at the time of sale.

Kenneth Mole Company Sold $10,000 Worth of Luggage with a One-Year