True Blue Retailers provides a one year labour and parts warranty with every appliance sold. At the beginning of 2019, the provision to cover warranty claims had a balance of $9 000. On 30 April 2019, $1300 was paid out for repairs on appliances under warranty. The correct accounting entry to record the payment of the claims is:

Question

Quizplus · Accepted Answer

The correct entry to record the payment of claims under the warranty is to decrease the Provision for warranties (a liability account) and to decrease the Bank (an asset account), reflecting the payment made from the company's bank account to cover the warranty claims.

True Blue Retailers Provides a One Year Labour and Parts