A Company Estimates That Warranty Expense Will Be 4% of Sales.The

question 84

Multiple Choice

A company estimates that warranty expense will be 4% of sales.The company's sales for the current period are $185,000.The current period's entry to record the warranty expense is:

• A) \[\begin{array} { | c | c | c | }
• \hline \text { Wartanty Expense } & 7,400 & \\
• \hline \text { Sales } & & 7,400 \\
• \hline
• \end{array}\]
• B) \[\begin{array} { | c | c | c | }
• \hline \text { Wartanty Expense } & 7,400 & \\
• \hline \text { Estimated Warranty Liability } & & 7,400 \\
• \hline
• \end{array}\]
• C) \[\begin{array} { | c | c | c | }
• \hline \text { Estimated Warranty Liability } & 7,400 & \\
• \hline \text { Estimated Warranty Expense } & & 7,400 \\
• \hline
• \end{array}\]
• D) \[\begin{array} { | c | c | c | }
• \hline \text { Wartanty Liability } & 7,400 & \\
• \hline \text { Cash } & & 7,400
• \end{array}\]
• E) No entry is recorded until the items are returned for warranty repairs.

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