A company estimates that warranty expense will be 5% of sales. The company's sales for the current period are $168,000. The current period's entry to record the warranty expense is:
A. Debit Estimated Warranty Liability $8400 credit Warranty Expense $8400.
B. Debit Warranty Expense $8400 credit Sales $8400.
C. Debit Estimated Warranty Liability $8400 credit Cash $8400.
D. Debit Warranty Expense $8400 credit Estimated Warranty Liability $8400.
E. No entry is recorded until the items are returned for warranty repairs.
Answer: D
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