Business: Excom sells radios and each unit carries a two-year replacement warranty. the cost of repair defects under the warranty is estimated at 5% of the sales price. during september, excom sells 100 radios for $50 each. one radio is actually replaced during september. for what amount in september would excom debit product warranty expense?

Excom sells radios and each unit carries a two-year

neariah24

13.01.2022

$150

Explanation:

The Warranty Expense account is a liability account and it must include all the estimate costs associated to the merchandise sold:

100 radios were sold and the company estimates to replace 5% or them = 100 x 5% = 5 radios

the cost of replacing 5 radios = 5 radios x $30 per radio = $150

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