1. In Year 4, Hydrogen Corp. began selling a new line of products that carry a two-year warrantyagainst defects. Based upon past experience with other products, the estimated warranty costsrelated to dollar sales are as follows:First year of warranty 2.1 %Second year of warranty 4.0%Sales and actual warranty expenditures for Years 4 and 5 are presented below:
Year 4 Year 5Sales $400,000 $650,000Actual warranty expenditures 28,000 32,000 Hydrogen uses the Assurance-type (expense) approach to account for warranties. What is the estimated warranty liability at the end of Year 5?