medium · Financial Accounting liabilities-bonds-payable
A manufacturer sells a machine for 200,000 with a 2-year warranty. Based on historical data, warranty costs are estimated at 4% of sales. In the first year, the company incurs 3,000 in actual warranty repairs.
What is the balance of the Warranty Liability at the end of Year 1?
- 3,000
- 5,000
- 11,000
- 8,000
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