Fast Bikes Company Offers Warranties on All Their Bikes

question 132

Multiple Choice

Fast Bikes Company offers warranties on all their bikes.They estimate warranty expense at 3.5% of sales.At the beginning of 2018,the Estimated Warranty Payable account had a credit balance of $1900.During the year,Fast Bikes had $296,000 in sales and had to pay out $5900 in warranty payments.At the end of the year,what is the ending balance in the Estimated Warranty Payable accounts?

• A) $6360
• B) $7800
• C) $8460
• D) $10,360

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Definitions:

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