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    Working with warranty expenses on balance sheets and income statements

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    Please help with the following problem involving financial accounting and bookkeeping.

    Company A provides warranties for many of its products. The January 1, 2002 balance of an estimated warranty liability account was 26,700. Based on an analysis of warranty claims during the past several years, this year's warranty provision was estimated to be 0.3 percent of sales. During 2002, the actual costs of servicing products under warranty were 11,900 and sales were 4,200,000.

    What amount of warranty expense will appear on the income statement for 2002 and what will be reported in the estimated warranty liability account on the December 31,2002 balance sheet?

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    https://brainmass.com/business/income-statement/warranty-expenses-balance-sheets-income-statements-4463

    Solution Preview

    Problem: What amount of warranty expense will appear on the income statement for 2002 and what will be reported in the estimated warranty liability account on the December 31,2002 balance ...

    Solution Summary

    The solution explains and computes the amount of warranty expense that should be reported on the income statements for 2002, as well as the balance sheet amount for estimated warranty liability.

    $2.19

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