Aisha Company paid $1,500 cash to replace a wheel on equipment sold under a two-year warranty in the prior year.The entry to record the payment will debit:

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The payment is related to a warranty obligation from the prior year, therefore it should be recorded as an adjustment to the estimated warranty payable account (assuming the amount of warranty liability was previously recorded). This means the entry should debit Estimated Warranty Payable and credit Cash. Options A, B, and D do not accurately reflect the nature of the transaction.

Aisha Company Paid $1,500 Cash to Replace a Wheel on Equipment