A company estimates that warranty expense will be 5% of sales. The company's sales for the current period are $206,000. The current period's entry to record the warranty expense is:
A. Debit Warranty Expense $10,300 credit Sales $10,300.
B. Debit Estimated Warranty Liability $10,300 credit Warranty Expense $5380.
C. Debit Warranty Expense $10,300 credit Estimated Warranty Liability $10,300.
D. Debit Estimated Warranty Liability $10,300 credit Cash $10,300.
E. No entry is recorded until the items are returned for warranty repairs.
Answer: C
You might also like to view...
McDonald's Corporation is the largest food service organization in the world. The proper handling of cash and food is important to the profitability of McDonald's. Based on your personal knowledge of McDonald's and the internal control concepts and
procedures described in the textbook, answer the following questions. REQUIRED: Describe procedures that you believe McDonald's may use to control cash receipts.
Using different depreciation methods for book purposes versus tax purposes for the same asset is
a. not allowed since the amount can only be calculated one way or the other, not both. b. the direct result of the differing goals of financial and tax accounting. c. contrary to GAAP. d. against the Internal Revenue Code, and as such, against the law.
Tarp Corporation Beginning retained earnings $550,000 Ending retained earnings 700,000 Dividends paid 100,000 Revenue 525,000 Refer to the selected information provided for Tarp Corporation. What is the net income for Tarp Corporation?
A) $150,000 B) $250,000 C) $525,000 D) $350,000
Explain how a counterproposal can be used to preserve a relationship with the reader when denying a request or when delivering bad news