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

[(4,000 goals x 2%) x $200] = $16,000.
[$16,000 - (45 x $200)] = $7,000.