Question

A Plus Appliances sells dishwashers with a fouryear warranty. In​ 2019, sales revenue for dishwashers is . The company estimates warranty expense at ​% of revenues. What is the total estimated warranty payable of A Plus Appliances as of December​ 31, 2019? A Plus Applicances began operating in 2019.​ (Round your final answer to the nearest​ dollar.)

Answer 1

A Plus Appliances sells dishwashers with a four-year warranty. In 2019, sales revenue for dishwashers is $94,000. The company estimates warranty expense at 4.5% of revenues. What is the total estimated warranty payable of A Plus Appliances as of December 31,2019? A Plus Appliances began operating in 2019. (Round your final answer to the nearest dollar.)

Answer:

$4230

Explanation:

Given that, the sales revenue to the dishwashers is equal to $94,000

Also the company estimated  warranty expense cost is equal to 4.5% of revenues,

Thus, the estimated warranty payable can be determined by the following formula:

Annual sales revenue for the dishwashers * warranty expense revenues

= $94,000 * 4.5% = $94,000 * 0.045

= $4230

Hence, the total estimated warranty payable of A Plus Appliances as of December​ 31, 2019 = $4230