During 2006, Venable Co What Amount Should Venable Report as a Liability at December

question 54

Multiple Choice

During 2006, Venable 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 2% of sales in the year of sale, 4% in the year after sale, and 6% in the second year after sale.Sales and actual warranty expenditures for the first three-year period were as follows: $\begin{array}{rrr}&\text { Sales } & \text { Actual Warranty Expenditures } \\2006 & \$ 400,000 & \$ 6,000 \\2007 & 1,000,000 & 30,000 \\2008 &{1,400,000}& {90,000}\\&{\$ 2,800,000} &{\$ 126,000}\end{array}$ What amount should Venable report as a liability at December 31, 2008?

• A)$0
• B)$10,000
• C)$136,000
• D)$210,000

---

Definitions:

Test Scores

Numeric representations of an individual's performance on a standardized test.

Refrigerators

Appliances used for keeping food and drinks cold.

Range

Range in statistics refers to the difference between the highest and lowest values in a dataset, indicating the spread of the data.

Interquartile Range

The statistical measure of middle fifty percent of a data set, calculated as the difference between the 75th and 25th percentiles.