Right Medical introduced a new implant that carries a five-year warranty against

Question

Right Medical introduced a new implant that carries a five-year warranty against manufacturer's defects. Based on industry experience with similar product introductions, warranty costs are expected to approximate 1% of sales. Sales were $25 million and actual warranty expenditures were $27000 for the first year of selling the product. What amount (if any) should Right report as a liability at the end of the year? (Enter your answers in whole dollars.) Warranty Liability Beg. Bal. Warranty expense Actual expenditures End Bal

Explanation / Answer

Warranty Liability Beg. Bal. 0 250000 Warranty expense Actual expenditure 27000 End. Bal. 223000

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