Jumbo Sales Offers Warranties on All Their Electronic Goods

question 80

Multiple Choice

Jumbo Sales offers warranties on all their electronic goods. Warranty expense is estimated at 3% of sales revenue. In 2013, Jumbo had $595,000 of sales. In the same year, Jumbo paid out $8,500 of warranty payments. Which of the following is the entry needed to record the disbursement of warranty payments?

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Definitions:

Legal Assent

A promise to buy or sell that the courts will require that the parties obey.

Mutual Mistake

The result of an error by both parties about a material fact, i.e., one that is important in the context of a particular contract.

Fraudulent Misrepresentation

The act of intentionally making false statements to induce another party to enter into a contract, resulting in harm or damage.

Intentional Misrepresentation

Deliberate false statement by one party aimed at getting another party to enter into an agreement.