Munster Sells a Product with a Four-Year Warranty Additional Data

question 62

Essay

Munster sells a product with a four-year warranty. Warranty costs are estimated as a percentage of sales as follows:
\begin{array}{llcc} 1/%&\text {Year of sale } \\1\%& \text { Year after sale } \\1\%& \text { Two years after sale } &\\ 1\%&\text { Three years after sale} &\\\end{array}

Additional data:
$\begin{array}{rl}&\text { Warranty }&\\\underline{\text { Expenditures }} & \underline{\text { Sales }}&\underline{\text {Year}}\\\$ 600 & \$ 50,000 &2013\\800 & 60,000&2014 \\900 & 40,000&2015 \\2,500 & 70,000&2016\end{array}$

Required:
a.If the modified cash method is in use, what would be warranty expense for 2015?
b.If the expense warranty accrual method is in use, what would be warranty expense for 2015?
c.If the expense warranty accrual method is in use, what amount of liability for warranties would be disclosed on the balance sheet on December 31, 2016?

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