12. Right Medical introduced a new implant that carries a five-year warranty aga

Question

12. 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 approximato 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 year? Enter your answers in whole dollars) Warranty Liability Beg. Bal 200,000 Warranty expense Actual expenditures End Bal. -29,000 229,000 MacBook Air esc F1 F3 ps 0 4

Explanation / Answer

Solution:

Warranty Liability

Beg. Bal. 20,000,000

29,000 Warranty expense

Actual expenditures 200,000

End Bal. 20,171,000

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