Question

A company sold $12,000 worth of bicycles with an extended warranty. it estimates that 2% of these sales will result in warranty work. the company should:

Answer 1

We are tasked to determine the action of the company when it sold $12,000 worth of their product which is a bicycle including an extended warranty price. It is estimated that extended warranty amount is 2% of the value of the bicycle of these sales will result in warranty work. The company should recognize or acknowledge the warranty expense and liability of expense at every the end of the year.