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Question: during 2016 green thumb company introduced a new line of...
Question details
During 2016 Green Thumb Company introduced a new line of garden
shears that carry a two-year warranty against defects. Experience
indicates that warranty costs should be 2% of net sales in the year
of sale and 3% in the year after sale. Net sales and actual
warranty expenditures were as follows:
| Net sales |
Actual warranty expenditures | ||||||
| 2016 | $ | 45,000 | $ | 1,000 | |||
| 2017 | 120,000 | 3,500 | |||||
At December 31, 2017, Green Thumb should report as a warranty
liability of:
Multiple Choice
-
$900
-
$1,250
-
$3,750
-
$4,500
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