Question
During August, Boxer Company sells $362,000 in merchandise that has a one year warranty. Experience shows that warranty expenses average about 5% of the selling
During August, Boxer Company sells $362,000 in merchandise that has a one year warranty. Experience shows that warranty expenses average about 5% of the selling price. The warranty liability account has a credit balance of $12,200 before adjustment. Customers returned merchandise for warranty repairs during the month that used $8,800 in parts for repairs. The entry to record the estimated warranty expense for the month is:
Multiple Choice
a. Debit Warranty Expense $5,900; credit Estimated Warranty Liability $5,900.
b. Debit Warranty Expense $18,100; credit Estimated Warranty Liability $18,100.
c. Debit Estimated Warranty Liability $8,800; credit Warranty Expense $8,800.
d. Debit Estimated Warranty Liability $18,100; credit Warranty Expense $18,100.
e. Debit Warranty Expense $14,700; credit Estimated Warranty Liability $14,700.
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