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Recording and Reporting Warranties During Year 1, Ward Company introduced a new product carrying...

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Accounting

Recording and Reporting Warranties
During Year 1, Ward Company introduced a new product carrying a two-year warranty against defects, which is included in the selling price of the product. The estimated warranty costs are 2% of sales within the first 12 months following the sale and 4% in the second 12 months following the sale. Sales and actual warranty expenditures for the years ended December 31 of Year 1 and Year 2 follow.
\table[[,,Actual Warranty],[,Sales,Expenditures],[Year 1,$840,000,$12,600
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