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Question(s) / Instruction(s):

A company sold $13,000 worth of trampolines with an extended warranty. It estimates that 1% of these sales will result in warranty work. The company should:
a.            Consider the warranty expense a remote liability since the rate is only 1%
b.            Recognize warranty expense at the time the warranty work is performed
c.             Recognize warranty expense and liability in the year of the sale
d.            Consider the warranty expense a contingent liability
e.            Recognize warranty liability when the company purchases the trampolines

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