At the Beginning of Year 1, McKee, Incorporated Had a Balance

question 63

Short Answer

At the beginning of Year 1, McKee, Incorporated had a balance in the Warranty Payable account of $15,600. During the year McKee sold for $650,000 several products that carried a two-year warranty. McKee estimated that warranty expense would be 3% of sales for the year.
Required:
If McKee's paid warranty claims in the amount of $12,500 during Year 1, what is the balance in the Warranties Payable account after the warranty obligation is recognized?

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Definitions:

Pathology

The study of diseases, their causes, processes, development, and consequences.

Trusting Relationship

A bond between two or more individuals that is based on mutual trust, safety, and respect, often pivotal in therapeutic and caregiving settings.

Patient

A person receiving or registered to receive medical treatment.

Schizophrenia

A severe mental disorder characterized by disordered thoughts, behaviors, and a loss of connection with reality.