Franconia Sales offers warranties on all their electronic goods. Warranty expense is estimated at 2% of sales revenue. In 2014, Franconia had $500,000 of sales. In the same year, Franconia paid out $7,500 of warranty payments. Please provide the journal entry to record the disbursement of warranty payments.
Definitions:
Value Increase
The rise in the worth or market value of an asset or investment over time.
Warrants
Financial derivatives that give the holder the right, but not the obligation, to buy or sell a security at a predetermined price before or on a specified date.
Maturity Dates
Refers to the specific date on which the principal amount of a bond, loan, or other financial instrument is scheduled to be paid in full.
Options
Financial derivatives that give the holder the right, but not the obligation, to buy or sell an asset at a pre-determined price before or at a specific time.
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