Use the Following Information for Questions:
Melchor Inc -The Warranty Payable on the December 31, 2010 Balance Sheet

question 65

Multiple Choice

Use the following information for questions:
Melchor Inc.offers a two-year warranty against failure of its products.The estimated liability is 1.5% in the year of sale and 3% in the second year.Sales and actual warranty expense for 2010 and 2011 were: $$\begin{array} { c c c } & \text { Sales } & \text { Actual Warranty Costs Incurred During Year } \\2010 & \$ 3,500,000 & \$ 110,000 \\2011 & \$ 3,900,000 & \$ 195,000\end{array}$$
-The warranty payable on the December 31, 2010 balance sheet was:

• A)$47,500
• B)$105,000
• C)$110,000
• D)$157,500

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