What is the estimated total warranty expense for Maverick Company at the end of 2020 concerning future obligations?

To determine the estimated total warranty expense for Maverick Company at the end of 2020, it is crucial to understand how warranty expenses are calculated. Companies typically estimate warranty expenses based on historical data and the expected costs associated with fulfilling warranty claims in the future.

Assuming that Maverick Company has calculated its warranty obligations based on prior sales and the percentage of products sold that have historically required warranty service, determining this total involves analyzing factors such as the total sales amount, the company's warranty policy, and the average cost of fulfilling warranty claims.

In this scenario, if the calculated total warranty expense is 44,000, it reflects the company's projection of future costs it will incur to satisfy warranty claims based on the number of products sold. This figure indicates a well-researched estimate that aligns with past experiences and forward-looking business practices.

Ultimately, the number 44,000 represents a reasoned financial estimate that ensures the company accurately reports its liabilities and maintains adequate reserves to meet future warranty obligations. This prudent accounting practice ensures that the company's financial statements provide a true and fair view of its financial position.