In 2020, Jimi Hendrix Corporation began selling a new line of guitars. The company guarantees the instruments against manufacturing defects for two years from the date of sale. The company has examined the warranty costs associated with previous models and estimates that the warranty costs - as a proportion of sales value - related to the sales will be: First year of warranty 3% Second year of warranty 5% In 2020 and 2021, sales were respectively $750,000 and $1,050,000. Warranty expenditures in 2020 2021 were respectively $45,000 and $75,000. 

What amount should be shown as the estimated warranty liability at the end of 2021? (assume the accrual method)  

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To determine the estimated warranty liability at the end of 2021 we need to calculate the expected w... View the full answer