1. **Problem statement:** We need to find the ending balance of the warranty repair reserve account as of 2021.12.31 for company "A" which provides a 3-year warranty on its products. The reserve is set aside based on sales revenue with rates 2% for the 1st year, 3% for the 2nd year, and 5% for the 3rd year. 2. **Given data:** - Sales revenue: 2019 = 20,000,000, 2020 = 28,000,000, 2021 = 36,000,000 - Actual costs incurred: 2019 = 900,000, 2020 = 1,360,000, 2021 = 1,120,000 3. **Formula and approach:** The warranty reserve for each year's sales is calculated as: $$\text{Reserve} = \text{Sales} \times (2\% + 3\% + 5\%) = \text{Sales} \times 10\%$$ But since the warranty covers 3 years, the reserve is recognized over 3 years with the respective percentages each year. 4. **Calculate reserves for each year as of 2021.12.31:** - For 2019 sales (3rd year of warranty): only 5% applies - For 2020 sales (2nd year): 3% + 5% = 8% - For 2021 sales (1st year): 2% + 3% + 5% = 10% 5. **Calculate reserve amounts:** - 2019 reserve remaining: $$20,000,000 \times 5\% = 1,000,000$$ - 2020 reserve remaining: $$28,000,000 \times (3\% + 5\%) = 28,000,000 \times 8\% = 2,240,000$$ - 2021 reserve remaining: $$36,000,000 \times (2\% + 3\% + 5\%) = 36,000,000 \times 10\% = 3,600,000$$ 6. **Sum all remaining reserves:** $$1,000,000 + 2,240,000 + 3,600,000 = 6,840,000$$ 7. **Final answer:** The ending balance of the warranty repair reserve account on 2021.12.31 is **6,840,000**.