Problem on warranty covering replacement of defective parts


A company sells computers at a selling price of $1,450 each. Each computer has a 2 year warranty that covers replacement of defective parts. It is estimated that 3% of all computers sold will be returned under the warranty at an average cost of $143 each. During November, the company sold 23,000 computers, and 330 computers were serviced under the warranty at a total cost of $46,000. The balance in the Estimated Warranty Liability account at November 1 was $25,500. What is the company's warranty expense for the month of November?

a) $98,670

b) $20,500

c) $46,000

d) $49,335

e) $47,190

Request for Solution File

Ask an Expert for Answer!!
Accounting Basics: Problem on warranty covering replacement of defective parts
Reference No:- TGS040000

Expected delivery within 24 Hours