Question

Igloo Cooler Co warrantees its coolers for 12 months. It began 2022 with a warrantee liability of $1,000 and ended the year with a warrantee liability of $800. On the company's income statement for the year ended 12/31/2022, the company reported warrantee expense of $1,200. How much cash did the company spend repairing coolers under warrantee in 2022?

Answer 1

The Igloo Cooler Co spent $400 repairing coolers under warranty in 2022. This can be calculated by subtracting the ending warranty liability from the beginning warranty liability, which gives $200, and adding the warranty expense, which gives $1,200. Therefore, the company spent $400 repairing coolers under warranty in 2022.