During 2010, Vanpelt Co

question 24

Multiple Choice

During 2010, Vanpelt 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: What amount should Vanpelt report as a liability at December 31, 2012?

• A)$0
• B)$15,000
• C)$204,000
• D)$315,000