During 2016, the Thomas Company began selling a new type of machine that carries a two-year assurance-type warranty against all defects. Based on past industry and company experience, estimated warranty costs should total $2,000 per machine sold. During 2016, sales and actual warranty expenditures were $4,000,000 (80 machines) and $44,000, respectively. Thomas uses the GAAP approach of accruing warranty expense (and the related liability) in the year of the sale.

What amount should Thomas report as its warranty expense for 2016?

Answer rating: 100% (QA)

Calculation of Warranty Expense for 2016 To calculate the warranty expense for 2016 we need ... View the full answer