Holmes Company Produces Widgets That Cost $120 Each and Have

question 138

Multiple Choice

Holmes Company produces widgets that cost $120 each and have a 5 percent failure rate during the warranty period.If 500 widgets are sold,the entry to record the estimated product warranty expense would be

• A) Product Warranty Expense 600
• Estimated Product Warranty Liability 600
• B) Product Warranty Expense 3,000
• Estimated Product Warranty Liability 3,000
• C) Product Warranty Expense 300
• Cash 300
• D) Estimated Product Warranty Liability 150
• Cash 150

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Definitions:

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Corporate Social Responsibility, the practice of companies taking responsibility for their impact on social, environmental, and economic factors.

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A medical instrument used for listening to internal body sounds, such as heartbeats or breathing.