Tractor World Offers Warranties on All Their Tractors

question 110

Multiple Choice

Tractor World offers warranties on all their tractors.They estimate warranty expense at 2.4% of sales.At the beginning of 2013,the Estimated warranty payable account had a credit balance of $900.During the year,Tractor World had $285,000 of sales,and had to pay out $5,100 in warranty payments.
-At the end of the year,how much Warranty expense was reported on the income statement?

• A) $2,640
• B) $5,100
• C) $4,200
• D) $6,840

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