Landfall Navigation began operations in 2024 and provides a one-year warranty on the products it sells. They estimate that 20,000 of the 400,000 units sold in 2024 will be returned for repairs and that these repairs will cost $8 per unit. The cost of repairing 16,000 units presented for service in 2024 was $128,000. Landfall should report a. warranty expense of $32,000 for 2024. b. warranty expense of $160,000 for 2024. c. warranty liability of $160,000 on December 31, 2024. d. no warranty obligation on December 31, 2024 since this is only a provision.

Landfall Navigation began operations in 2024 and provides a one-year warranty on the products it sells. They estimate that 20,000 of the 400,000 units sold in 2024 will be returned for repairs and that these repairs will cost $8 per unit. The cost of repairing 16,000 units presented for service in 2024 was $128,000. Landfall should report a. warranty expense of $32,000 for 2024. b. warranty expense of $160,000 for 2024. c. warranty liability of $160,000 on December 31, 2024. d. no warranty obligation on December 31, 2024 since this is only a provision.

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter8: Current And Contingent Liabilities

Section: Chapter Questions

Problem 56BE

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