Use the Following Information for Questions

question 59

Multiple Choice

Use the following information for questions:
Direct Sales Inc.offers a two-year warranty against failure of its products.The estimated liability is 4% of sales in the year of sale and 6% in the second year.Sales for 2010 and 2011 were: $2,500,000 and $2,800,000, respectively.They incurred no warranty costs in 2010 but in 2011 they spent $175,000 on repairs related to the warranties from 2010 and 2011.
-The warranty expense for 2010 was:

• A)$80,000
• B)$100,000
• C)$150,000
• D)$250,000

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Definitions:

Incomplete Disposition

The failure to fully deal with or dispose of an asset or a legal matter.

Trust Property

Refers to assets held in a trust, managed by a trustee on behalf of the beneficiaries of the trust according to the terms of the trust agreement.

Resulting Trust

A trust that is implied by law to effectuate the presumed intention of the parties involved, often arising when a property transfer does not fit the characteristics of an express trust.

Settlor's Intent

The purpose or intention expressed by a settlor when creating a trust, directing how the trust assets should be managed and distributed.