During August,Boxer Company sells $356,000 in merchandise that has a one year warranty.Experience shows that warranty expenses average about 5% of the selling price.The warranty liability account has a credit balance of $12,800 before adjustment.Customers returned merchandise for warranty repairs during the month that used $9,400 in parts for repairs.The entry to record the estimated warranty expense for the month is:
A)Debit Warranty Expense $17,800;credit Estimated Warranty Liability $17,800.
B)Debit Warranty Expense $5,000;credit Estimated Warranty Liability $5,000.
C)Debit Warranty Expense $14,400;credit Estimated Warranty Liability $14,400.
D)Debit Estimated Warranty Liability $9,400;credit Warranty Expense $9,400.
E)Debit Estimated Warranty Liability $17,800;credit Warranty Expense $17,800.

Question

Quizplus · Accepted Answer

The estimated warranty expense is 5% of the selling price, or $356,000 x 5% = $17,800. The entry to record the estimated warranty expense is:Debit Warranty Expense $17,800Credit Estimated Warranty Liability $17,800

During August,Boxer Company Sells $356,000 in Merchandise That Has a One