Porter's Company sells merchandise with ONE year Warranty. In 2013, Sales consisted of 1,500 units. It is Estimated that Warranty Repairs will average $10 per Unit Sold, and 30%, of repairs will be made in 2013 and 70% in 2014. In the 2013 Income Statement, Porter's should show Warranty Expense of:

$15,000

Explanation:

The computation of the warranty expense is shown below:

= Sales units × per unit warranty repair cost

= 1,500 units × $10

= $15,000

Based on GAAP, all the expenses and the income should be recorded in the same period so full amount i.e sales units multiplied by the per unit warranty repair cost i.e Warranty expense of $15,000 should be recorded

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