Hi-Tech Company Produces Widgets That Cost $60 Each and Have $\begin{array}{llr} \text {Product Warranty Expense } &300\\ \text { Estimated Product Warranty Liability } &&300\\\end{array}$

question 73

Multiple Choice

Hi-Tech Company produces widgets that cost $60 each and have a 5 percent failure rate.If 500 widgets are sold,the entry to record the estimated product warranty expense would be

• A)
• \(\begin{array}{llr}
• \text {Product Warranty Expense } &300\\
• \text { Estimated Product Warranty Liability } &&300\\
• \end{array}\)
• B)
• \(\begin{array}{llr}
• \text { Product Warranty Expense } &1,500\\
• \text { Estimated Product Warranty Liability } &&1,500\\
• \end{array}\)
• C)
• \(\begin{array}{llr}
• \text { Product Warranty Expense } &150\\
• \text {Cash } &&150\\
• \end{array}\)
• D)
• \(\begin{array}{llr}
• \text { Estimated Product Warranty Liability } &75\\
• \text { Cash} &&75\\
• \end{array}\)

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Definitions:

Commission

A fee paid for services, usually a percentage of the total cost, to an agent or employee for facilitating a sale or other transaction.

Commission-only Basis

A compensation structure where earnings are solely made from commissions without a base salary.

Monthly Sales

The total revenue generated from sales activities within a specific month, often used to measure business performance.

Independent Television Stations

TV stations that operate without the affiliation of major broadcast networks, often providing non-mainstream and local content.