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3 September, 18:58

Bonita manufactures high-end whole home electronic systems. The company provides a one-year warranty for all products sold. The company estimates that the warranty cost is $290 per unit sold and reported a liability for estimated warranty costs $10.6 million at the beginning of this year. If during the current year, the company sold 59000 units for a total of $326 million and paid warranty claims of $12090000 on current and prior year sales, what amount of liability would the company report on its balance sheet at the end of the current year?

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  1. 3 September, 20:52
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    warrnaty laiblity will be reported at 15,620,000 dollars

    Explanation:

    beginning + warrantty on units sold - claims = ending

    Beginning warrant liability 10,600,000

    During the year, the company wll recognize liablity based on the predetermined rate

    ID SOLD 59,000

    the warranty per unit is 290

    59,000 x 290 = 17,110,000

    Then the warranty claims decrease the warrant liability

    paid warranty claims 12,090,000

    10,600,000 + 17,110,000 - 12,090,000 = 15,620,000
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