At the time of sale, warranty costs should be:

estimated based on the company's history of product repairs.

ignored.

recorded at 2% of sales.

Mason Company sold 1,000 flat screen televisions at a price of $900 each. Mason offers a 3-year warranty on all electronics. Estimated repair expense based on prior years experience is 2% of sales. What is the appropriate adjusting journal entry that Mason should make to record warranty expense?

Debit Warranty expense 18,000; Credit Warranty liability 18,000

Debit Warranty expense 6,000; Credit Warranty liability 6,000

Debit Warranty expense 18,000; Credit Cash 18,000

Debit Warranty expense 6,000; Credit Cash 6,000

recorded when paid.