In 2014, Slimon Corporation began selling a new line of products that carry a two-year...
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Accounting
In 2014, Slimon Corporation began selling a new line of products that carry a two-year warranty against defects. Based upon past experience with other products, the estimated warranty costs related to dollar sales are as follows:
First year of warranty: 2% Second year of warranty: 5% Sales and actual warranty expenditures were: 2014: sales of $300,000; warranty expenditures of $5,000 2015: sales of $400,000; warranty expenditures of $5,000
What is the estimated warranty liability at the end of 2015?
a. $19,000.
b. $29,000.
c. $49,000.
d. $8,000
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