What Entry Is Required When a Business Estimates Warranty Payable $\begin{array} { |l|} \hlineEstimated ~Warranty ~Payable\\\hlineWarranty ~Expense\\\hline\end{array}$

question 47

Multiple Choice

What entry is required when a business estimates warranty payable each period based on sales revenue?

• A) \(\begin{array} { |l|}
• \hline
• Estimated ~Warranty ~Payable\\
• \hline
• Warranty ~Expense\\
• \hline
• \end{array}\)
• B) \(\begin{array} { |l|}
• \hline
• Warranty ~Expense\\
• \hline
• Sales\\
• \hline
• \end{array}\)
• C) \(\begin{array} { |l|}
• \hline
• Warranty ~Expense\\
• \hline
• Estimated~ Warranty ~Payable\\
• \hline
• \end{array}\)
• D) \(\begin{array} { |l|}
• \hline
• Inventory\\
• \hline
• Estimated ~Warranty ~Payable\\
• \hline
• \end{array}\)

Comprehend the concept of fair value and its application in asset exchanges.

Be able to calculate and recognize gain or loss on the exchange of nonmonetary assets.

Recognize the importance and method of recording assets acquired through donation.

Understand the treatment of boot in nonmonetary exchanges.

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Definitions:

Ending Finished Goods Inventory

The value of products available for sale at the end of an accounting period, after all manufacturing costs are accounted for.

Fixed

Refers to something that is unchanging and stable, often used in the context of expenses or assets that do not vary with production volume.

Variable

An element, feature, or factor that is likely to vary or change; in scientific experiments, this is the factor being tested or measured.

Product Cost

Product cost refers to the total expenditure incurred to create a product, including direct materials, direct labor, and manufacturing overhead.