Albion Company Sells Merchandise with a One Year Warranty

Multiple Choice

Albion Company sells merchandise with a one year warranty. In 2013, sales consisted of 2,500 units. It is estimated that warranty repairs will average $20 per unit sold, and 30% of the repairs will be made in 2013 and 70% in 2014. In the 2013 income statement, Albion should show warranty expense of:

A) $15,000
B) $35,000
C) $50,000
D) $0
E) $25,000