Question
Bison Company reported sales revenue for 2013 of $900,000. The products were sold with a nineminus month warranty. Members of Bison's management estimate the cost
Bison Company reported sales revenue for 2013 of $900,000. The products were sold with a
nineminus
month
warranty. Members of Bison's management estimate the cost of the warranty will be equal to 5% of sales revenue. Which of the following will be included in the entry to record the actual amounts paid out as a result of warranty claims?
A.
a debit to Warranty Expense for the actual amount of payments
B.
a debit to Estimated Warranty Payable for the actual amount of payments
C.
a credit to Estimated Warranty Payable for $45,000
D.
a debit to Estimated Warranty Payable for $45,000
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