Hunter's Home Remodeling had cash sales for the month of May totaling $43,700. Hunter offers a 1-year warranty on its construction services. If Hunter estimates warranty claims will equal 6% of sales, what is the journal entry to record the estimated warranty expense for the month?
A) Debit Warranty expense, $2,622; credit Cash, $2,622
B) Debit Estimated warranty payable, $2,622; credit Warranty expense, $2,622
C) Debit Warranty expense, $2,622; credit Estimated warranty payable, $2,622
D) Debit Warranty expense, $2,622; credit Sales revenue, $2,622
C) Debit Warranty expense, $2,622; credit Estimated warranty payable, $2,622
Explanation: sales × estimated warranty claim = warranty expense for the month; ex: $43,700 × 6% = $2,622
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