Prince Sells a Certain Product for $20, 000 $\begin{array} { c c } \text { Unearned Warranty Revenue } & 25,000 \\\text { Warranty Revenue } & 25,000\end{array}$

question 7

Multiple Choice

Prince sells a certain product for $20, 000.Included in this price is an implied service contract of $800.Fifty machines were sold in 2010.Warranty expense incurred during 2010 amounted to $25, 000.The company uses the sales warranty accrual method.Which entry would probably not be made in 2010?

• A)
• \(\begin{array} { c c }
• \text { Unearned Warranty Revenue } & 25,000 \\
• \text { Warranty Revenue } & 25,000
• \end{array}\)
• B)
• \(\begin{array} { l c r }
• \text { Cash } & 1,000,000 \\
• \text { Sales } & 960,000 & \\
• \text { Unearned Warranty Revenue } & 40,000
• \end{array}\)
• C)
• \(\begin{array} { l l }
• \text { Cash } & 40,000 \\
• \quad \text { Warranty Revenue } & &40,000
• \end{array}\)
• D)
• \(\begin{array} {lc }
• \text { Warranty Expense } & 25,000 \\
• \text { Cash } & 25,000
• \end{array}\)

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