Question

Panther Co. had a quality-assurance warranty liability of $356,000 at the beginning of 2018 and $302,000 at the end of 2018. Warranty expense is based on 5% of sales, which were $55 million for the year. What were the warranty expenditures for 2018

Answer 1

$2,804,000

Step-by-step explanation:

Panther corporation has a quality assurance liability of $356,000 at thr start of 2018

They also had a quality assurance liability of $302,000 at the end of 2018

Warranty expense is 5% of the total sales which was $55 million for the year

= 5/100 × 55,000,000

= 0.05×55,000,000

= 2,750,000

Therefore, the warranty expenditures for 2018 can be calculated as follows

=$356,000+$2,750,000-$302,000

= $3,106,000-$302,000

= $2,804,000

Hence the warranty expenditures for 2018 is $2,804,000