Question - The Kaufman car company sells cars with a warranty that they will work properly. based on its historic experience, it expects the cost of honoring this warranty to be about 1% of sales. In 2014, it makes $500 million of sales. Assume all the warranties for these cars expire at the end of 2016. The actual costs to fix the cars was $1,700,000 in 2014, $2,000,000 in 2015, and $1,300,000 in 2016. What expense would the company record:
A. In 2014, as it sells the cars?
B. In 2014, as it pays the $1,700,000 in claims?
C. In 2015, as it pays the $2,000,000 in claims?
D. In 2016, as it pays the $1,200,000 in claims?
E. At the end of 2016, when the warranties expire?
F. In total, over the 2014-2016 period?