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Hickory sold $32,000 of the inventory and has agreed to pay warranty expenses for its customers. These are expected to be $1,600 and occur evenly over the next four months (i.e., starting in June). What is the amount of Hickory’s May expenses when applying the matching principle?

Respuesta :

Answer:

$43,600

Explanation:

The computation of the  amount of Hickory’s May expenses when applying the matching principle is shown below:

Accrual expenses = Cost of Goods Sold + Advertising expenses+ Delivery Costs + Warranty Costs

= $32,000 + $8,000 + $2,000 + $1,600

= $43,600

The purchase of inventory would not be recognized as it comes under the balance sheet. Hence, ignored it

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