During 2023, Gum Co. introduced a new product carrying a two-year assurance-type warranty against defects....
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During 2023, Gum Co. introduced a new product carrying a two-year assurance-type warranty against defects. Gum Co. uses the expense warranty approach. The estimated warranty costs related to dollar sales are 6%. Sales and actual warranty expenditures for the years ended December 31, 2023 and 2024 are as follows: 2023 2024 Sales $150,000 250 000 $400.000 Actual Warranty Expenditures $2,250 | 7.500 $9.750 What amount should Gum report as estimated warranty liability on its December 31, 2024 balance sheet? Select one: O a $7,500 O b. $4,250 Oc: $11,250 O d. $14,250 e. $16,500
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