During 2013, Rao Co

question 155

Short Answer

During 2013, Rao 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, 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: (assume the accrual method) What amount should Rao report as a liability at December 31, 2015?
A) $0
B) $134,000
C) $105,000
D) $381,000

• A) $0
• B) $134,000
• C) $105,000
• D) $381,000

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Definitions:

Delusions of Grandeur

A false belief in one's own superiority, greatness, or power, often found in psychiatric conditions such as bipolar disorder or schizophrenia.

Schizophrenia

A persistent and serious mental illness marked by altered cognition, perception, feelings, speech, self-identity, and actions.

Hallucination

A perception in the absence of external stimulus that has qualities of real perception, typically auditory or visual, that can be associated with mental health disorders.

Sensory Systems

Sensory systems are the parts of the nervous system that receive and interpret information from the environment through senses like sight, hearing, touch, taste, and smell.