Eckstein Company sells television sets with a two year service warranty. Each television sells for $400. In September, Eckstein sold 50 television sets and estimates that during the warranty period Eckstein will provide an average of $40 of service costs per television set. What amount of service warranty expense should Eckstein Company recognize in September?

Question

Quizplus · Accepted Answer

Eckstein should recognize a service warranty expense of $2,000 in September, calculated as 50 television sets multiplied by the estimated $40 service cost per set.

Eckstein Company Sells Television Sets with a Two Year Service