A company sells big-screen televisions for $3,000 each. Each television has a two-year warranty that covers the
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A company sells big-screen televisions for $3,000 each. Each television has a two-year warranty that covers the replacement of defective parts. It is estimated that 1% of all televisions sold will be returned under warranty at an average cost of $250 each. During July, the company sold 10,000 big-screen televisions, and 80 were serviced under the warranty during July at a total cost of $18,000. The credit balance in the Estimated Warranty Liability account on July 1 was $26,000. What is the company's warranty expense for the month of July?
a. $51,000
b. $1,000
c. $25,000
d. $33,000
e. $18,000
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Authors: Steve Jackson, Roby Sawyers, Greg Jenkins
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