Ace Appliances Sells Dishwashers with a 3-Year Warranty

question 9

Multiple Choice

Ace Appliances sells dishwashers with a 3-year warranty.In 2013,there are $90,000 of sales revenues for dishwashers.The company estimates warranty expense at 3% of revenues.What is the total estimated warranty payable for Ace regarding the sales in 2013?

• A) $2,700
• B) $600
• C) $1,400
• D) $3,000

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Definitions:

Postdated Check

A check written with a future date, delaying the ability of the recipient to cash or deposit it until that date.

Dishonored

Refers to a financial instrument, such as a check or promissory note, that has been refused payment when presented.

Landlord

A person who owns real property and who rents or leases it to someone else. Also called lessor.