How much is the estimated warranty liability

Assignment Help Accounting Basics

Reference no: EM132826255

In 2020 Plumpton company started selling new computer that carried a 2-year warranty against defects. Bases on the manufacturer's recommendations, the entity estimated warranty cost as a percentage of sales

First year of warranty 3%
Second year of warranty. 5%

Sales and actual warranty repairs are as follows:

                                              2020    2021
Sales    5,000,000    7,000,000
Actual Warranty repairs   100,000 250,000

Problem 1: How much is the warranty expense for 2020?

Problem 2: How much is the estimated warranty liability for 2021?

Reference no: EM132826255

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