Power Company Sells Merchandise with a One Year Warranty

question 38

Multiple Choice

Power Company sells merchandise with a one year warranty. In 2012, sales consisted of 1,600 units. It is estimated that warranty repairs will average $10 per unit sold, and 30% of the repairs will be made in 2012 and 70% in 2013. In the 2012 income statement, Power should show warranty expense of

• A) $4,800
• B) $11,200
• C) $16,000
• D) $0

Distinguish between different types of learning such as operant conditioning and observational learning.

Comprehend how prosocial and antisocial behaviors can be learned through observation.

Understand the biological basis of observational learning through the study of mirror neurons.

Appreciate the impact of media violence on behavior and distinguish research findings on this topic.

---

Definitions:

Retained Earnings

The portion of a company's profit kept in the business after dividends are paid, which can be used for reinvestment in operations, debt reduction, or other purposes.

Component Cost Of Preferred Stock

The required rate of return by investors on a company's preferred stock, essentially the cost to the company of issuing preferred stock.

Dividend Yield

The financial ratio that shows how much a company pays out in dividends each year relative to its stock price.

After-Tax Cost Of Debt

The net cost to a company for borrowing funds, calculated by subtracting the tax savings from the cost of debt's interest payments.