Business, 01.02.2021 21:20 carlos200411114

During Year 3, Rex Co. introduced a new product carrying a 2-year assurance-type warranty against defects. The estimated warranty costs related to dollar sales are 2% within 12 months following sale and 4% in the second 12 months following sale. Sales and actual warranty expenditures for year ended December 31, Year 3 and Year 4, are as follows: Year Sales Actual Warranty Expenditures

2008 $250,000 $2,250
2009 250,000 7,500
Total $500,000 $9,750

What amount should Gum report as estimated warranty liability on its December 31, 2009 balance sheet?

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During Year 3, Rex Co. introduced a new product carrying a 2-year assurance-type warranty against de...