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