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

question 184

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

---

Definitions:

Factor Definition

The process of identifying and defining the elements or criteria that are important for evaluating or measuring something.

Compensable Factor

A criteria used in job evaluation to determine the value of a job and its appropriate compensation.

Pay Grade

A classification system that defines the range of pay rates for different levels of jobs within an organization based on the job's relative value or complexity.

Pay Range

The spectrum of compensation that an organization is willing to pay for a particular position, from the minimum to the maximum salary.