On 30 June 2016,TV Manufacture Ltd,which Uses Accrual Accounting,estimates That

question 3

Multiple Choice

On 30 June 2016,TV Manufacture Ltd,which uses accrual accounting,estimates that it will incur warranty costs of $135 000 in the next financial year on products sold during the year just ended.On 7 October 2016,the manufacturer pays $21 000 under the warranty.
-What is the journal entry made by TV Manufacture Ltd on 30 June 2016?

• A) Dr Warranty liability Cr Cash
• B) Dr Warranty liability Cr Warranty expense
• C) Dr Warranty expense Cr Warranty liability
• D) None of the answers provided

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Definitions:

Financial Statements

Reports that provide an overview of a company’s financial condition, including balance sheet, income statement, and cash flow statement.

Bank Loan Payable

This term represents the amount owed by an individual or an entity to a bank as a result of borrowing funds, typically subject to specified repayment terms and interest.

Interest Accrued

Interest that has been incurred but not yet paid, often recognized in financial statements through adjusting entries.

Salaries Expense

The total amount paid to employees for services rendered during a specific period, reflected as an expense in financial statements.