Bike World Offers Warranties on All Their Bikes

question 9

Multiple Choice

Bike World offers warranties on all their bikes. They estimate warranty expense at 3.5% of sales. At the beginning of 2013, the Estimated Warranty Payable account had a credit balance of $1,200. During the year, Bike World had $295,000 of sales, and had to pay out $5,300 in warranty payments. At the end of the year, what is the closing balance in the Estimated Warranty Payable accounts?

• A)$6,225
• B)$6,500
• C)$9,125
• D)$10,325

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Definitions:

Psychological Disorders

A pattern of behavioral or psychological symptoms that impact multiple areas of life and/or create distress for the person experiencing these symptoms.

Unconscious Conflicts

Mental struggles largely beyond the awareness of an individual, often stemming from repressed feelings or experiences.

Social Skills Training

A form of behavior therapy used to improve interpersonal skills through learning and practicing new behaviors.

Modelling

A learning method where individuals ascertain how to act or perform by observing another individual.