Elgin Company sells merchandise with a one year warranty. Sales consisted of 2,500 units in 2009 and 2,000 units in 2010. It is estimated that warranty repairs will average $10 per unit sold, and 30% of the repairs will be made in 2009 and 70% in 2010 for the 2009 sales. Similarly, 30% of repairs will be made in 2010 and 70% in 2011 for the 2010 sales. In the 2010 income statement, how much of
the warranty expense shown will be due to 2009 sales?
A) $7,500
B) $17,500
C) $25,000
D) $0
D
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