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Question - On January 1, 2015, Cullumber Company began a warranty program to stimulate sales. It is estimated that 5% of the units sold will be returned for repair at an estimated cost of $39 per unit. Sales and warranty figures for the three years ended December 31 are as follows:
2015
2016
2017
Sales (units)
1,300
1,600
1,900
Sales price per unit
$190
$120
$125
Units returned for repair under warranty
75
90
105
Actual warranty costs
$2,535
$2,930
$3,635
Required - Calculate the warranty expense for each year and warranty liability at the end of each year.
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