Kristin Company sells computers with a 6-month warranty. It is estimated that 2%

Question

Kristin Company sells computers with a 6-month warranty. It is estimated that 2% of all units sold will need repairs under warranty at an estimated cost of $200 per unit. During January, the company sold 100,000 computers at $1,750 each, and 1,500 computers were turned in for repairs during that same month. The total actual repairs costs amounted to $185,000 from the computer parts inventory. The balance in the Estimated Warranty Liability Account on January 1 was $15,000. What is the balance in the Estimated Warranty Liability Account at the end of January?
Answer
A. $230,000
B. $600,000
C. $215,000
D. $415,000

Explanation / Answer

The balance in the Estimated Warranty Liability Account at the end of January. $230,000 (A)

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