Rockport Boat Builders Pty Ltd provides a 12-month warranty on boat building work.

On 1 January 2020, there was a credit balance of $80,000 in its warranty provision account. During the year ended 31 December 2020, Rockport Boat Builders Pty Ltd incurred $85,000 servicing warranty claims. All warranty costs were in the form of labour costs.

During the year ended 31 December 2020, Rockports revenue from boat building was $7,000,000. Warranty liabilities are estimated as 1% of boat building revenue for the previous 12 months.

Required:

What is the journal entry to record the adjustment for the Provision for warranty as at 30 June 2020 for Rockport Boat Builders Pty Ltd?

Group of answer choices

DR: Warranty expense $75,000, CR: Provision for Warranty $75,000

DR: Warranty expense $95,000, CR: Provision for Warranty $95,000

DR: Warranty expense $65,000, CR: Provision for Warranty $65,000

DR: Provision for Warranty $75,000, CR: Warranty expense $75,000

DR: Provision for Warranty $95,000, CR: Warranty expense $95,000