Jumbo Sales Corporation offers warranties on all their electronic goods
Warranty expense is estimated at 3% of sales revenue. In 2017, the company had $602,000 of sales. In the same year, it paid out $12,000 of warranty payments. Which of the following is the entry needed to record the estimated warranty expense?
A)
Estimated Warranty Payable 12,000
Cash 12,000
B)
Warranty Expense 12,000
Estimated Warranty Payable 12,000
C)
Warranty Expense 18,060
Estimated Warranty Payable 18,060
D)
Warranty Expense 18,060
Sales Revenue 18,060
C .Calculation: Warranty expense = $602,000 x 3% = $18,060
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