Question

Blazer Company sells merchandise with a one-year warranty. In Year 1, sales consisted of 2,800 units. It is estimated that warranty repairs will average $10 per unit sold, and 30% of the repairs will be made in Year 1 and 70% in Year 2. In the income statement for Year 1, Blazer Company should show warranty expense ofa. $19,600.b. $28,000.c. $8,400.d. $0.

Answer 1

Answer:

= $ 28,000.00

Explanation:

Warranty expenses are accounted for in the period in which they are incurred. This is in accordance with the accounting reporting standards.

For Blazer company:  Year 1 sales 2800 units

Warranty per unit: $ 10 per unit

expected warranty cost: = 2800x $10

    = $ 28,000.00