A Company Estimates That Warranty Expense Will Be 4% of Sales

question 166

Multiple Choice

A company estimates that warranty expense will be 4% of sales. The company's sales for the current period are $185,000. The current period's entry to record the warranty expense is:

• A) Debit Estimated Warranty Liability $7,400; credit Warranty Expense $7,400
• B) Debit Warranty Expense $7,400; credit Sales $7,400.
• C) Debit Warranty Expense $7,400; credit Estimated Warranty Liability $7,400.
• D) Debit Estimated Warranty Liability $7,400; credit Cash $7,400.
• E) No entry is recorded until the items are returned for warranty repairs.

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Definitions:

Multilevel Systems Model

A framework for understanding how different levels (individual, group, organizational) interact and influence one another within a system.

Societal Learning

Learning that occurs at a community or societal level, involving shared knowledge, practices, and values that are passed among members.

Task Interdependence

The degree to which tasks within a team or organization rely on each other to be successfully completed.

Group Structure

The system of roles, norms, and relationships within a group that determines how it functions and interacts.