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Inline Incorporated manufactures skates and equipment for in-line skating. The company offers a one-year warranty on...

Inline Incorporated manufactures skates and equipment for in-line skating. The company offers a one-year warranty on all products. During 2019, the company recorded net sales of $4,127.8 million. Historically, about 1.5% of all sales revenue for the year are the cost of repairing and or replacing goods under warranty. Assume that at the start of the year Inline’s balance sheet included an accrued warranty liability of $15.4 million and at the end of the year, the accrued warranty liability balance was $11.5 million.

a. How should Inline account for warranty claims?

b. Calculate Inline’s warranty expense for 2019.

c. How much did Inline pay during the year to repair and or replace goods under warranty?

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