During 2007, 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, 2009?
A) $0
B) $15,000
C) $204,000
D) $315,000
Correct Answer:
Verified
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