Multiple Choice
Mariano Corporation sells 11,000 units of inventory during the first year of operations for $500 each.Mariano provides a one-year warranty on parts.It is estimated that 4% of the units will be defective and that repair costs are estimated to be $50 per unit.In the year of sale,warranty contracts are honored on 100 units for a total cost of $5,000.What amount will be reported as Estimated Warranty Liability at the end of the year?
A) $5,000
B) $10,000
C) $17,000
D) $22,000
Correct Answer:
Verified
Correct Answer:
Verified
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