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

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Definitions:

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Books containing detailed information on a specific subject or topic, used as study material in educational settings.

Automobile Accidents

Events involving vehicles in traffic that result in damage, injury, or death.

Variables

Elements, characteristics, or conditions that can change or vary in a study or experiment, affecting the results in some way.

Rain

Precipitation in the form of water droplets that fall from clouds in the Earth's atmosphere.