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XYZ Company manufactures skateboards. The company offers a 1-year warranty on all products. During 2016, the company recorded Sales Revenue of $2,000,000. Historically, about 1% of all Sales Revenue for the year are the cost of repairing and/or replacing goods under warranty. Assume that at the start of the year, XYZ Company's Balance Sheet included an Accrued Warranty Liability of $5,000. During the year, actual cost of repair and/or replacement of goods under warranty was $18,000.

a) Calculate XYZ company's estimated warranty expense for 2016.

b) What is the balance of the warranty liability at the end of the year?

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Financial Accounting, Accounting

Category:- Financial Accounting
Reference No.:- M92049580

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