Question

Panther Co. had a quality-assurance warranty liability of $340,000 at the beginning of 2021 and $318,000 at the end of 2021. Warranty expense is based on 5% of sales, which were $50 million for the year. What amount of warranty costs were paid during

Answer 1

Answer: $2,522,000

Step-by-step explanation:

Warranty costs paid during 2021 = Opening warranty liability + Warranty expense for the year - Closing warranty liability

Warranty expense for the year:

= 50,000,000 * 5% warranty expense

= $2,500,000

Warranty costs paid during 2021 = 340,000 + 2,500,000 - 318,000

= $2,522,000