During 2012,Grinder Machinery Company Introduced a New Line of Machines

question 40

Multiple Choice

During 2012,Grinder Machinery company introduced a new line of machines that carry a three-year warranty against manufacturer's defects.Based on industry experience,warranty costs are estimated at 2% of sales in the year of sale,4% in the year after sale,and 6% in the second year after sale.Sales and actual warranty expenditures for the first three-year period were as follows: What amount should Grinder Machinery report as a liability at December 31,2014?

• A) $0
• B) $5,625
• C) $76,500
• D) $118,125

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Definitions:

Liberation Theology

A movement in Christian theology, emphasizing liberation from social, political, and economic oppression as an anticipation of ultimate salvation.

Organized Belief System

A structured set of beliefs and practices shared by a community or society, often centered around religion or ideology.

Objective Evidence

Information that is observable, measurable, and unaffected by personal feelings or opinions; considered factual and reliable.

Conviction

A firmly held belief or opinion, or the legal determination that someone is guilty of a crime.