Julia Used Cars Offers a One-Year Warranty from the Date

question 19

Essay

Julia Used Cars offers a one-year warranty from the date of sale on all cars it sells. From historic data, Bill Julia estimates that, on average, each car will require the company to incur warranty cost of $820. The cars sold for an average of $9,500 each. The following activities occurred during 2010.
If Julia accrued its warranty liability with a single adjusting entry at year-end, the journal entry would include:
a. a debit to Contingent Warranty Liability for $28,700
b. a debit to Warranty Expense for $28,700
c. a credit to Parts for $17,220
d. a credit to Cash for $28,700

---

Definitions:

Indus Valley

An ancient civilization that flourished in the Indus River basin, known for its advanced urban planning, architecture, and agricultural practices.

Mesopotamia

An ancient region located in the eastern Mediterranean, bounded by the Tigris and Euphrates rivers, known as one of the cradles of civilization where writing and urban culture first appeared.

Sacrifice Ritual

Ceremonial acts performed in various cultures and religions involving the offering of gifts, and often the life of an animal or symbolic item, to a deity or higher power for the purpose of divine favor or atonement.

Aryan Religion

The religious beliefs and practices associated with the Indo-European peoples known as Aryans, precursor to major religions such as Hinduism.