Ask Question
4 April, 08:23

Swift Corp. prepares its financial statements for its fiscal year ending December 31, year 1. Swift estimates that its product warranty liability is $28,000 at December 31, year 1. On February 12, year 2, before the financial statements were issued, Swift received information about a product defect that will require a recall of all units sold in year 1. It is expected the product recall will cost an additional $40,000 in warranty repairs. What should Swift present in its December 31, year 1 financial statements? Group of answer choices

+1
Answers (1)
  1. 4 April, 10:49
    0
    C) An estimated warranty liability of $68,000.

    Explanation:

    Since Swift will record an estimate of warranty expense, it must also include the costs of the new recall. It's warranty liability account already had a credit balance of $28,000, but it must be adjusted to show the real estimated costs = $28,000 + $40,000 = $68,000. Therefore, warranty liability should have a $68,000 credit balance in the balance sheet.
Know the Answer?
Not Sure About the Answer?
Get an answer to your question ✅ “Swift Corp. prepares its financial statements for its fiscal year ending December 31, year 1. Swift estimates that its product warranty ...” in 📙 Business if there is no answer or all answers are wrong, use a search bar and try to find the answer among similar questions.
Search for Other Answers