Question

Carpenter Inc. had a balance of $89,000 in its quality-assurance warranty liability account as of December 31, 2020. In 2021, Carpenter's warranty expenditures paid were $454,000. Its warranty expense is calculated as 1% of sales. Sales in 2021 were $40.9 million. What was the balance in the warranty liability account as of December 31, 2021

Answer 1

$44

Step-by-step explanation:

Calculation to determine what

was the balance in the warranty liability account as of December 31, 2021

Warranty liability account as of December 31, 2021=(1%*89,000)+(40,900,000*.01)-(1%*$454,000)

Warranty liability account as of December 31, 2021=89+(40,900,000*.01)-454

Warranty liability account as of December 31, 2021=$44

Therefore the balance in the warranty liability account as of December 31, 2021 was $44