The estimated liability


Belmont Inc. offers a two-year warranty against failure of its products. The estimated liability is4% of sales in the year of sale and 6% in the second year. Sales for 2008 and 2009 were:$2,000,000 and $2,200,000, respectively. They incurred no warranty costs in 2008 but in 2009they spent $125,000 on repairs related to the warranties from 2008 and 2009.The warranty liability as at the end of the 2009 year was?

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Accounting Basics: The estimated liability
Reference No:- TGS0679327

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