Exhibit 9-4 During 2014, the Thomas Company began selling a new type of machine that carries a two-year warranty against all defects. Based on past industry and company experience, estimated warranty costs should total $2,000 per machine sold. During 2014, sales and actual warranty expenditures were $4,000,000 (80 machines) and $44,000, respectively.

-Refer to Exhibit 9-4. What amount should Thomas report as its warranty expense for 2014?
A) $ 0
B) $ 44,000
C) $160,000
D) $320,000

Question

Exhibit 9-4 During 2014, the Thomas Company began selling a new type of machine that carries a two-year warranty against all defects. Based on past industry and company experience, estimated warranty costs should total $2,000 per machine sold. During 2014, sales and actual warranty expenditures were $4,000,000 (80 machines) and $44,000, respectively.

-Refer to Exhibit 9-4. What amount should Thomas report as its warranty expense for 2014?

-Refer to Exhibit 9-4. What amount should Thomas report as its warranty expense for 2014?
A) $ 0
B) $ 44,000
C) $160,000
D) $320,000

Quizplus · Accepted Answer

The estimated warranty expense is $2,000 per machine sold, and 80 machines were sold during the year. Therefore, the warranty expense for 2014 is $160,000 (80 machines * $2,000 per machine).

Exhibit 9-4 During 2014, the Thomas Company Began Selling a New