Mckay company sells merchandise with a one-year warranty. in year 1, sales consisted of 1,200 units. it is estimated that warranty repairs will average $10 per unit sold, and 30% of the repairs will be made in year 1 and 70% in year 2. in the year 1 income statement, mckay should show warranty expense of?
Sales in year 1 = 1,200 units
Estimated average warranty repair = $10 per unit sold
Percent of repairs made in year 1 = 30%
Percent of repair made in year 2 = 70%
The warranty Expenses for the year 1 will be
= Number of units sold × Estimated average warranty repair
= 1200 Units × $10 Per Unit
Mckay should show warranty expense of $12,000 in year 1
due to the changes the federal reserve is making the unused reserves will impact the economy by them facing inflation. inflation is definfed as the increase in pricing of a good or service but the decline of the value of money used for purchasing those items. when the economy has a high inflation rate, they are subject to money loss and hurt on the economy.