A Company Sells Computers for $1,800 Each

question 47

Multiple Choice

A company sells computers for $1,800 each.Each computer has a two-year warranty that covers replacement of defective parts.It is estimated that 2% of all computers sold will be returned under the warranty with an average cost of $150 each.During November,the company sold 30,000 computers;.400 computers were serviced under the warranty during November at a total cost of $55,000.The balance in the Estimated Warranty Liability account at November 1 was $29,000.What is the company's warranty expense for the month of November?

• A)$26,000
• B)$45,000
• C)$55,000
• D)$60,000
• E)$90,000

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Definitions:

Credit Analysis

The process by which a lender evaluates the creditworthiness of a potential borrower, assessing the ability to repay a loan.

Likelihood

The probability or chance of an event occurring or a hypothesis being correct.

Pay

Remuneration given by an employer to an employee for their labor or services.

Credit Period

The duration during which a buyer can pay for purchased goods or services without incurring interest or penalties.