Analyzing and Computing Accrued Warranty Liability and Expense Waymire Company sells a motor that carries a 60-day unconditional warranty against product failure. From prior years' experience, Waymire estimates that 2% of units sold each period will require repair at an average cost of $100 per unit. During the current period, Waymire sold 69,000 units and repaired 1,000 units. (a) How much warranty expense must Waymire report in its current period income statement

the warranty expense reported is $138,000

Explanation:

a. The computation of the warranty expense that should be reported in its current period income statement is shown below:

= Given percentage × units sold × repair average cost

= 2% × 69,000 units × $100 per units

= $138,000

Hence, the warranty expense reported is $138,000

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