State Street Digital, Inc. starts the year with $3500 in its Estimated Warranty Payable account. During the year, there were $213,000 in sales and $4900 in warranty repair payments. State Street Digital estimates warranty expense at 4% of sales. The Warranty Expense for the year is ________.
A) $8520
B) $4900
C) $3500
D) $7120

Question

Quizplus · Accepted Answer

The Warranty Expense for the year is calculated as 4% of sales, which is 4% of $213,000 = $8,520.