A company manufactures and sells its products to customers. The company estimates that 1% of sales...

 

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A company manufactures and sells its products to customers. The company estimates that 1% of sales dollars is an appropriate estimate of replacement costs under warranty. During 2021, the first year of the company's operations, the total credit sales were $750,000 and the actual warranty replacement costs totaled $6,000. What is the impact to the income statement and to cash flows as a result of the warranty related events, assuming no other events occurred? Income decreases by $7,500, Cash is not impacted Income is not impacted, Cash decreases by $6,000 Income is not impacted, Cash decreases by $7,500 Income decreases by $6,000, Cash is not impacted A company manufactures and sells its products to customers. The company estimates that 1% of sales dollars is an appropriate estimate of replacement costs under warranty. During 2021, the first year of the company's operations, the total credit sales were $750,000 and the actual warranty replacement costs totaled $6,000. What is the impact to the income statement and to cash flows as a result of the warranty related events, assuming no other events occurred? Income decreases by $7,500, Cash is not impacted Income is not impacted, Cash decreases by $6,000 Income is not impacted, Cash decreases by $7,500 Income decreases by $6,000, Cash is not impacted

Answer rating: 100% (QA)

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