$1$

Required information

Exercise $7-12($Static$)$ Other accrued liabilities$-$warranties LO $7-5$

$[$The following information applies to the questions displayed below.$]$

Prist Company had not provided a warranty on its products, but competitive pressures forced management to add this feature at the beginning of $2022.$ Based on an analysis of customer complaints made over the past two years, the cost of a warranty program was estimated at $\backslash (0\mathrm{.}5\backslash \%\backslash )$ of sales. During $2022,$ sales totaled $\backslash (\backslash$$ $4,100,000\backslash ).$ Actual costs of servicing products under warranty totaled $\backslash$$$18,700.$

Exercise $7-12($Static$)$ Part b

b$.$ What type of accrual adjustment should be made at the end of $2022?$

Multiple Choice sold in $2022$ that are still under warranty. No accrual adjustment is required. sold in $2022$ that are still under warranty.