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Olden Motor Vehicles Ltd offers a 12-month warranty for the sale of used motor vehicles....

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Accounting

Olden Motor Vehicles Ltd offers a 12-month warranty for the sale of used motor vehicles. On 1 July 2015, there was a credit balance of $70 000 in its Warranty Provision account. During the year ended 30 June 2016, Olden Motor Vehicles incurred $65 000 in warranty costs, of which $30 000 was in the form of inventory and $35 000 was for labour costs. At 30 June 2016, Olden Motor Vehicles estimated its liability for unexpired warranty contracts as $75 000.

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