In 2017,Morton Co.sold 100 hot air balloons at $4,000 each.The balloons carry a five-year warranty for defects.Morton estimates that repair costs will average 4% of the total selling price.The estimated warranty liability at the beginning of the year was $42,000.$11,000 in claims was actually incurred during the year to honor their warranty.What was the balance of the estimated warranty liability at the end of the year?

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The total selling price of the balloons is 100 balloons * $4,000 each = $400,000. The estimated repair costs at 4% of the total selling price is $400,000 * 4% = $16,000. The beginning estimated warranty liability was $42,000, and $11,000 in claims was incurred during the year. Therefore, the end balance of the estimated warranty liability is the beginning balance plus the estimated repair costs for the year minus the actual claims incurred: $42,000 + $16,000 - $11,000 = $47,000.