'No Rust' Car Sales Provides a One Year Labour and Parts

question 32

Multiple Choice

'No Rust' car sales provides a one year labour and parts warranty with every car sold and at the start of 2012 had a provision of $16 000 to cover warranty claims. On 30 March 2012 $2700 was paid out for repairs for vehicles under warranty. What is the correct accounting entry to record the payment of the claims?

• A) Debit warranty expense $2700; credit provision for warranties $2700
• B) Debit provision for warranties $2700; credit bank $2700
• C) Debit provision for warranties $2700; credit warranty expense $2700
• D) Debit warranty expense $2700; credit bank $2700

---

Definitions:

Sleeplessness

The condition of being unable to sleep, also known as insomnia, affecting both mental and physical health.

Truly Awake

Being fully alert and conscious, often relating to a heightened state of awareness or understanding.

Feeding

The act of supplying food to oneself or others, ensuring nutrition is received to maintain life and health.

Sleeping Disorders

A group of conditions that affect the ability to sleep well regularly, impacting physical health, mental health, and overall quality of life.