During 2013, gardner home center sold 800 power washers for $350 each. the power washers carry a 2-year warranty for repairs. es

Question

3 years ago

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During 2013, gardner home center sold 800 power washers for $350 each. the power washers carry a 2-year warranty for repairs. es

timates indicate that repair costs will average 2% of sales. how much warranty expense should be accrued as a result of the 2013 sales of this product?
a. $2,800
b. no liability should be recorded until units are brought in for repairs.
c. $5,600
d. $8,400

Business

1 answer:

Serggg [28] · Answer 1 · 2022-04-16T15:33:07+03:00

If Gardner Home Center sold 800 power washers for $350 each, this sums up to an amount of $280,000. However, the power washers carry a 2-year warranty for repairs, estimating a repair costs averaging 2% of sales. Extracting 2% from $280,000 amount of gives us a value of $5,600. Therefore the answer is option C. $5,600 - which must be recorded because the sale took place.