Business, 18.12.2019 02:31 AvaHeff

Milford company sells a motor that carries a three-month unconditional warranty against product failure. based on a reliable statistical analysis, milford knows that between the sale and the end of the product warranty period, two percent of the units sold will require repair at an average cost of $50 per unit. the following data reflect milford's recent experience:

october november december dec. 31 total
units sold 24,000 26,000 26,000 76,000
known product failures from sales in:
october 130 190 170 490
november 130 220 350
december 210 210

calculate, and prepare a journal entry to record, the estimated liability for product warranties at december 31. assume that warranty costs of known failures have already been reflected in the records.

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