Homework Answers
Solution: Answer = $170,000
Calculating warranty expenses for the year:
Warranty expenditures for the year = warranty expense for the year - increase in warranty liability
| Warranty expense | $190,000 |
| Less: Increase in liability | $20,000 |
| Warranty Expenditures | $170,000 |
Increase in warranty liability is deducted because it means that less cash is paid in the year.
So it results in increasing the liability balance
there fore, Warranty expenditures for the year = $170,000.
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