value: 1.00 points Right Medical introduced a new implant that carries a five-ye

Question

value: 1.00 points Right Medical introduced a new implant that carries a five-year warranty against manufacturer's dofects. Based on industry experience with similar product introductions, warranty costs are expected to approximate 1% of sales. Sales were $20 million and actual warranty expenditures were $29,000 for the first year of selling the product. What amount (if any) should Right report as a liability at the end of the yea Enter your answers in whole dollars.) Warranty Liability Beg. Bal. Warranty expense Actual expenditures End Bal References eBook&Resources; Worksheet Learning Objective: 13-05 Identify situations that constitute contingencies and the circumstances under which they should be accrued Difficulty: 2 Medium Learning Objective: 13-06 Demonstrate the appropriate accounting treatment for contingencles, including unasserted claims and assessments Check my work esc F1

Explanation / Answer

Calculate Warranty liabilties at the end of the year :

At the end report warranty liability is $171000

Beginning balance 0 Add: Warranty expenses (20000000*1%) 200000 Less: Actual expenditure (29000) Ending balance of warranty liabilities 171000

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