Electro Company makes battery powered ebikes. They cost $1,600 to make which consists of $400 labor and $1,200 parts. They are sold with a one-year unlimited warranty on parts only (customer pays labor) and this year Electro sold 6,600 bikes. Experience shows that 10% of bikes make a warranty claim and the average claim is $125. At year end 470 bikes from this year's sales have already made a claim.

Required 1: Assume there were no other transactions in the year, what is the amount credited on Estimated Liability for Product Warranties when doing the year end AJE? $

Required 2: Assume there were no other transactions in the year, what is the amount of Warranty expense reported in the income statement for the year? $

Required 3: Assume there were no other transactions in the year, what is the amount of claims for warranties served during the year? $

Answer rating: 100% (QA)

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