Question

Ace Appliances sells dishwashers with a 3-year warranty. In 2013, there are $90,000 of sales revenues for dishwashers. The company estimates warranty expense at 3% of revenues. What is the total estimated warranty payable for Ace regarding the sales in 2013?

- $2,700
- $600
- $1,400
- $3,000

Answer 1

The total estimated warranty payable for Ace Appliances regarding the dishwasher sales in 2013 is $2,700, calculated as 3% of the $90,000 sales revenue.

Step-by-step explanation:

The question asks for the total estimated warranty payable for Ace Appliances regarding the sales of dishwashers in 2013. To compute this, we will calculate 3% of the $90,000 sales revenues. Using the formula warranty payable = sales revenues × warranty expense rate, we get:

warranty payable = $90,000 × 0.03

warranty payable = $2,700.

Therefore, the total estimated warranty payable for sales in 2013 is $2,700.