Strikers,Inc.sells soccer goals to customers over the Internet.History has shown that 2% of Strikers' goals are faulty and will need repair under the warranty program.For the year,Strikers has sold 4,000 goals and 45 have been repaired.If the estimated cost to repair a goal is $200,what would be the Warranty Liability at the end of the year?

Question

Quizplus · Accepted Answer

The formula for finding warranty liability is: (Number of faulty units x Estimated cost for repair) - Total cost of repairs already made. Using this formula, we get: (2% of 4,000 goals) x $200 - $9,000 = $7,000. Therefore, the warranty liability at the end of the year would be $7,000, which is option C.