In 2010, the Markel Company sold 14,000 washing - 14635

Solution Posted by
yousafbhutta

yousafbhutta

Rating : (28)C
Solution Detail
Price: $0.50
  • From: Business,
  • Posted on: Fri 02 Nov, 2012
  • Request id: None
  • Purchased: 0 time(s)
  • Average Rating: No rating
Request Description

 

 

                  Exhibit 2

In 2010, the Markel Company sold 14,000 washing machines. Markel estimated that 12% of the machines would require repairs under the two-year warranty at an average cost of $50. During 2010, Markel had an actual outlay of $48,000 for repairs under warranty. Markel uses the expense warranty accrual method.

Refer to Exhibit 2.  At what amount should the company record warranty expense for 2010?

Answer

 

$42,000

 

$48,000

 

$84,000

 

$96,000

          Refer to Exhibit 2. What amount should the company report for estimated liability under warranties at the end of 2010?

Answer

 

$36,000

 

$42,000

 

$48,000

 

$84,000

 

 

Solution Description

 

 

                  Exhibit 2

In 2010, the Markel Company sold 14,000 washing machines. Markel estimated that 12% of the machines would require repairs under the two-year warranty at an average cost of $50. During 2010, Markel had an actual outlay of $48,000 for repairs under warranty. Markel uses the expense warranty accrual method.

Refer to Exhibit 2.  At what amount should the company record warranty expense for 2010?

Answer