Question

Panther Co. had a quality-assurance warranty liability of $356,000 at the beginning of 2018 and $311,000 at the end of 2018. Warranty expense is based on 3% of sales, which were $58 million for the year. What were the warranty expenditures for 2018?

Answer 1

warranty expenditures for 2018: $ 1,785,000

Step-by-step explanation:

warranty expected 3% of sales

58,000,000 x 3% = 1,740,000

Beginning - warrant expenditures + expected liab = ending warrant liability

We post our givens in the formula and solve for expenditures:

356,000 - X + 1,740,000 = 311,000

1,740,000 + 356,000 - 311,000 = expenditures

1,785,000 = expenditures