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    g00034234's Avatar
    g00034234 Posts: 1, Reputation: 1
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    #1

    Dec 21, 2008, 03:37 AM
    Warranty Expense
    Rama, Inc. offers a two-year warranty against failure of its products. The estimated liability is 4% of sales in the year of sale and 6% in the second year. Sales for 2005 and 2006 were: $2,000,000 and $2,500,000, respectively. What is the warranty liability for 2005:
    pready's Avatar
    pready Posts: 3,197, Reputation: 207
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    #2

    Dec 21, 2008, 01:42 PM

    Sales of $2,000,000 * 4% for the first year
    batates's Avatar
    batates Posts: 1, Reputation: 1
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    #3

    Dec 21, 2008, 11:03 PM
    isn't it 2,000,000 * 0.1 = 200,000
    ?
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