Multiple Choice Question 123 During 2016, Sheffield Corp. introduced a new line of machines that carry a three-year warranty against manufacturers defects. Based on industry experience, warranty costs are estimated at 2% of sales in the year of sale, 3% in the year after sale, and 4% in the second year after sale. Sales and actual warranty expenditures for the first three-year period were as follows: (assume the accrual method) Sales Actual Warranty Expenditures 2016 $1607000 $38000 2017 2496000 65000 2018 2102000 134000 $6205000 $237000 What amount should Sheffield report as a liability at December 31, 2018? $0 $69720 $84080 $321450

Multiple Choice Question 123 During 2016, Sheffield Corp. introduced a new line of machines that carry a three-year warranty against manufacturer's defects. Based on industry experience, warranty costs are estimated at 2% of sales in the year of sale, 3% in the year after sale, and 4% in the second year after sale. Sales and actual warranty expenditures for the first three-year period were as follows: (assume the accrual method) Actual Warranty Expenditures Sales 2016 $38000 $1607000 2496000 2017 65000 2018 2102000 134000 $6205000 $237000 What amount should Sheffield report as a liability at December 31, 2018? $0 0 $ 69720 O $ 84080 O $ 321450