In March, Ravenna Corporation sold $85,000 of inventory. Ravenna offers a one year warranty on all of its inventory. Ravenna estimates that 6 percent of inventory sold is usually returned and replaced during the warranty period. Given this information, what amount of warranty expense should Ravenna Corporation recognize in March?

Question

Quizplus · Accepted Answer

Ravenna should recognize a warranty expense of 6% of the $85,000 inventory sold, which is $5,100 (0.06 * $85,000).

In March, Ravenna Corporation Sold $85,000 of Inventory