In 2015, Boone, Inc

Multiple Choice

In 2015, Boone, Inc. sold 1,000 carpets for $50 each. The carpets carry a 2-year warranty for repairs. Boone estimates that repair costs will average 2% of the total selling price. What is the amount that would be recorded in the warranty liability account as a result of selling the carpets during 2015?

A) No liability should be recorded until the carpets are returned for repairs.
B) $ 20
C) $1,000
D $500