Saran Digital,Inc

question 135

Multiple Choice

Saran Digital,Inc.starts the year with $3,500 in its Estimated Warranty Payable account.During the year,there were $226,000 in sales and $5,000 in warranty repair payments.Saran Digital estimates warranty expense at 4% of sales.The Warranty Expense for the year is ________.

• A)$9,040
• B)$5,000
• C)$3,500
• D)$7,540

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Definitions:

Spot Rates

The current market price at which a particular asset can be bought or sold for immediate delivery.

Hedged Date

The date on which a hedge transaction is initiated to protect against future fluctuations in value.

Foreign Exchange Hedge

A financial transaction implemented to protect an investment or business operation from adverse movements in exchange rates.

Foreign Currency Futures

Financial contracts to exchange currencies on a specified future date at a predetermined price.