During 2017, Blevert Co What Amount Should Blevert Report as a Liability at December

question 51

Multiple Choice

During 2017, Blevert Co. introduced a new line of machines that carry a three-year warranty against manufacturer's defects. Based on industry experience, warranty costs are estimated at 1% of sales in the year of sale, 3% in the year after sale, and 5% in the second year after sale. Sales and actual warranty expenditures for the first three-year period were as follows: $\begin{array}{lcc}& \underline{\text {Sales}}& \underline{\text {Actual Warranty Expenditures}}\\2017 & \$500,000 & 8,000 \\2018 & 1,600,000 &20,000 \\2019 &\underline{ 2,300,000} &\underline{ 100,000} \\&\$4,400,000&\$128,000\end{array}$

What amount should Blevert report as a liability at December 31, 2018?

• A) $144,000
• B) $124,000
• C) $161,000
• D) $181,000

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Definitions:

Bid

An offer made by an individual or company to buy a good or service, or to perform a job at a specified price.

Tid

An abbreviation for "ter in die," which is Latin for "three times a day"; commonly used in medical prescriptions to indicate dosing frequency.

Prn

An abbreviation for the Latin phrase "pro re nata," meaning "as the situation demands," often used in medical prescriptions to indicate taking medicine as required.

Intranasal

Administration or action occurring within the nasal passages, often referencing medication delivery.