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How much is the warranty liability for ledybag company

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Reference no: EM132839967

In 2020, Ledybag Company started selling new computer that carried a 2-year warranty against defects Based on the company's past experience, the entity estimated warranty cost as a percentage of sales.

First year of warranty. 4%

Second year of warranty. 10%

Sales and actual warranty repairs are as follows:

                                                        2020                    2021

Sales                                   ?4,000,000.     ?6,200,000

Actual warranty repairs.          200,000.             350,000

Problem 1: How much is the warranty liability for 2021?

Reference no: EM132839967

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