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Business, 23.12.2019 22:31 yahyaomf

In 2016, general dynamics corporation began selling a new line of products that carries a two-year warranty against defects. based upon past experience with other products, the estimated warranty costs related to dollar sales are as follows:

first-year of warranty 2%
second-year of warranty 5%
sales and actual warranty expenditures for 2016 and 2017 are presented below:

2016 2017
sales $600,000 $800,000
actual warranty expenditures $20,000 $40,000
what is the estimated warranty liability at the end of 2017 in $?

a. 20,000
b. 64,000
c. 38,000
d. 96,000

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