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Hendricks Equipment Company sells computers for $1,500 each and also gives each customer a 2-year...

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Accounting

Hendricks Equipment Company sells computers for $1,500 each and also gives each customer a 2-year warranty that requires the company to perform periodic services and to replace defective parts. During 2019, the company sold 900 computers. Based on past experience, the company has estimated the total 2-year warranty costs as $100 per unit. In 2019, Hendricks incurred actual warranty costs $30,000. How much is 2019 warranty expense, under the expense warranty approach?

  1. $30,000

  2. $1,350,000

  3. $90,000

  4. $120,000

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