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Caldor Health accrued $140,000 for a warranty liability related to sales made in 2020. Warranties cover...

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Accounting

Caldor Health accrued $140,000 for a warranty liability relatedto sales made in 2020. Warranties cover defects for 2 years fromthe date of sale. Claims in 2020 were $60,000 and in 2021 were$70,000. Warranty expense fro 2020 and 2021 are:

A) $60,000 and $70,000

B)$60,000 and $80,000

C)$140,000 and $0

D)$140,000 expense and $10,000 income

Please give specific reason for every choice that why it iscorrect and why it is wrong if you can. Thank you so much!!!!!

Answer & Explanation Solved by verified expert
3.7 Ratings (329 Votes)
The correct option is c Warranty expenses are estimated costs which a company might incur to repair or provide replacement for goods sold These warranty expenses are    See Answer
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