1.The characteristics of a liability include:

oOccurrence of a past transaction or event

oExistence of a present obligation

oA liability can be current or noncurrent

oAll of these answers are correct

oRequirement of future payment of assets or rendering of services

2.West Coast Outdoor Co. estimates that warranty expense will be 1% of sales. The current period's sales were $740,000. The entry to record the warranty expense is:

oDR| Estimated Warranty Liability 7,400 and CR| Warranty Expense

oDR | Warranty Expense 7,400 CR| Sales 7,400

oDR| Warranty Expense 7,400 andCR| Estimated Warranty Liability 7,400

oDR| Estimated Warranty Payable 7,400 and CR| Warranty Expense 7,400

oDR| Estimated Warranty Liability 7,400 and CR| cash 7,400