What business transaction must occur in order to reduce Estimated Warranty Payable?
A)Goods under warranty are repaired in the period after the sale
B)Warranty costs are accrued at the end of the accounting period
C)Sale of goods on account
D)Customers take advantage of cash discounts for early payment

Question

Quizplus · Accepted Answer

The reduction of Estimated Warranty Payable would occur when goods under warranty are repaired in the period after the sale. This would result in a decrease in the estimated liability, as the actual costs incurred for the repairs would be recognized and the estimated liability would be adjusted accordingly. Accruing warranty costs, making sales on account, and customers taking advantage of cash discounts for early payment would not directly impact the Estimated Warranty Payable account.

What Business Transaction Must Occur in Order to Reduce Estimated