Account for warranties. Key Company offers a three-year warranty on its premium door locks. During the year, the company had sales of $100,000. Related to the sales, warranty costs should be approximately $3,000 per year. How much warranty expense related to these sales will Key Company’s income statement show in the year of the sales? How much warranty expense related to these sales will Key Company have in the two years after the sales?

To account for warranties, Key Company should recognize warranty expense in the income statement in the year of the sales and allocate warranty costs for the subsequent two years.

1. Warranty expense related to sales in the year of sales:
Since Key Company offers a three-year warranty on its premium door locks and the sales were $100,000, the warranty expense related to these sales in the year of the sales will be calculated as follows:

Warranty expense in the year of sales = (Sales * Warranty cost rate) / Warranty coverage period
= ($100,000 * $3,000/yr) / 3 years
= $100,000 * 0.01
= $1,000

Therefore, Key Company's income statement will show $1,000 as the warranty expense related to these sales in the year of the sales.

2. Warranty expense related to sales in the two years after the sales:
Since the warranty coverage period is three years and the warranty costs should be approximately $3,000 per year, the remaining warranty expense related to these sales for the two years after the sales can be calculated as follows:

Remaining warranty expense = Warranty cost rate * Remaining warranty period

In this case, the remaining warranty period is 2 years. Therefore:

Remaining warranty expense = $3,000/yr * 2 years
= $6,000

Therefore, Key Company will have a warranty expense of $6,000 related to these sales in the two years after the sales.

To determine the warranty expense related to these sales for Key Company's income statement in the year of the sales, you need to calculate the expense for that specific year.

Since the company offers a three-year warranty, the sales made in this year will only have one year of warranty coverage. Therefore, the warranty expense for this year's sales will be $3,000.

Now, let's calculate the warranty expense for the two years after the sales. Since the warranty lasts for three years, the remaining two years of coverage will be accounted for in the subsequent years.

For each subsequent year, the warranty expense related to these sales will also be $3,000 per year, as stated in the information given.

Therefore, the warranty expense related to these sales for Key Company will be as follows:
Year of sales: $3,000
First year after sales: $3,000
Second year after sales: $3,000

It's important to note that warranty expenses may vary based on actual warranty claims and other factors. The calculations provided are based on the assumption that the costs will be approximately $3,000 per year, as mentioned in the question.