12. Right Medical introduced a new implant that carries a five-year warranty aga

Question

12. Right Medical introduced a new implant that carries a five-year warranty against manufacturer's defects. Based on industry experience with similar product introductions, warranty costs are expected to approximate 1 % of sales. Sales were $20 milon and actual warranty expenditures were $29,000 fr the first year of seling the product. What amount (if any) should Right report as a liabilty at the end of the year? Enter your answers in whole dollars Beg. Bal 200,000 29,0001 Warranty expense Actual expendtures End Bal. 429,000 MacBook Air esc é F3 F7 8 4

Explanation / Answer

Warranty Liability

Beg. Bal. $200,000 Warranty expense(1% × $20,000,000) Actual expenditures $29,000 End Bal. $171,000 Balance

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