Sara Digital Starts the Year with $2,500 in Its Estimated

question 52

Multiple Choice

Sara Digital starts the year with $2,500 in its Estimated Warranty Payable account. During the year, there were $210,000 of sales and $4,500 of warranty repair payments. Sara Digital estimates warranty expense at 2% of sales. At the end of the year, what was the balance in the Estimated Warranty Payable account?

• A)$4,200 debit
• B)$4,500 credit
• C)$2,500 debit
• D)$2,200 credit

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Definitions:

Balloons

Financial term referring to a lump-sum payment due at the end of a loan term or payment plan, typically much larger than the preceding installments.

Recover

The act of obtaining something lost or owed, especially compensation for an injury or loss through legal processes.

Portable Garages

Moveable structures designed to provide temporary or semi-permanent shelter for vehicles, typically made from materials like steel frames and fabric covers.

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The process of obtaining compensation from another party due to a loss or injury they caused.