American Business Services Introduced a New Machine on January 1

question 15

Multiple Choice

American Business Services introduced a new machine on January 1, 2016. The machine carried a two-year warranty against defects. The estimated warranty costs related to dollar sales were 3% in the year of sale and 5% in the year after sale. Additional information follows: Actual Warranty If American Business Services considers these warranties to be assurance-type and accounts for them by accruing the expense and the related liability) in the year of the sale, what amount relating to warranties should be reflected on the December 31, 2017, balance sheet?

• A) $5,300
• B) $6,400
• C) $6,500
• D) $9,100

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Definitions:

Learning Disability

A neurological disorder that affects an individual's ability to interpret what they see and hear or to link information from different parts of the brain.

Parenting Style

The behavioral strategy and attitude applied by parents in raising their children, affecting their psychological and social development.

High-Achieving Children

Children who perform significantly above their peers in various fields such as academic, athletic, or in the arts.

Authoritative

Referring to a commanding and self-confident force that is likely to be respected or obeyed.