During Year 1,its First Year of Operations,Benitez Co

question 41

Multiple Choice

During Year 1,its first year of operations,Benitez Co.reported sales of $800,000.At the end of Year 1,the company estimated its warranty obligation at 3% of sales.During Year 1,the company paid $13,000 cash to settle warranty claims.Which of the following statements is true?

• A) Warranty expenses would decrease net earnings by $24,000 in Year 1.
• B) Cash decreased by $13,000 as a result of the accounting events associated with warranties in Year 1.
• C) The warranties payable account has a balance of $11,000 at the end of Year 1.
• D) All of these answer choices are correct.

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Definitions:

Retail Chain

A series of stores or outlets owned and operated by the same company, selling similar or identical merchandise to consumers.

Systematic Thinking

An approach to problem-solving that involves understanding and analyzing the relationships between parts of a system.

Integrated Fashion

A way of combining elements or systems so that they work together in a coherent and complementary manner.

Problem Solving

The process of identifying a challenge, barrier, or unmet need and developing, implementing, and assessing solutions or strategies to address the issue.