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On April 1, Year 3, Ash Corp. Began offering a new product for sale under a one-year warranty. Of the 5,000 units in inventory at April 1, 2003, 3,000 had been sold by June 30, Year 3. Based on its experience with similar products, Ash estimated that the average warranty cost per unit sold would be $8. Actual warranty costs incurred from April 1 through June 30, Year 3, were $7,000. At June 30, Year 3, what amount should Ash report as estimated warranty liability?

Answer

Class, based on the information provided about the company Ash Corp, we can estimate that their warranty liability on June 30, Year 3 should be $16,000. To calculate this, we need to determine the number of units still under warranty and multiply it by the estimated warranty cost per unit. The number of units still under warranty can be calculated by subtracting the units sold by June 30, Year 3 from the total units in inventory on April 1, Year 3. This gives us a remaining 2,000 units. Multiplying this by the estimated warranty cost per unit of $8 gives us a total estimated warranty liability of $16,000. Therefore, according to these calculations, Ash Corp. should report an estimated warranty liability of $16,000 on June 30, Year 3. To access more questions on warranty liability, visit brainly.com/question/15457683 #SPJ4.