Landfall Navigation Began Operations in 2017 and Provides a One

question 81

Multiple Choice

Landfall Navigation began operations in 2017 and provides a one year warranty on the products it sells. They estimate that 20000 of the 400000 units sold in 2017 will be returned for repairs and that these repairs will cost $8 per unit. The cost of repairing 16000 units presented for service in 2017 was $128000. Landfall should report

• A) warranty expense of $32000 for 2017.
• B) warranty expense of $160000 for 2017.
• C) warranty liability of $160000 on December 31 2017.
• D) no warranty obligation on December 31 2017 since this is only a contingent liability.

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Definitions:

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