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Lager Company Sells Merchandise with a One Year Warranty

Question 147

Multiple Choice

Lager Company sells merchandise with a one year warranty. In 2013, sales consisted of 1,600 units. It is estimated that warranty repairs will average $10 per unit sold, and 30% of the repairs will be made in 2013 and 70% in 2014. In the 2013 income statement, Lager should show warranty expense of


A) $4,800
B) $11,200
C) $16,000
D) $0
E) $8,000

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