In December Year 1, Lucas Corporation sold merchandise for $10,000 cash. Lucas estimated that the warranty obligation relating to this sale is $700. On February 12, Year 2, Lucas paid cash of $550 to settle a related warranty claim by this customer. Which of the following summarizes the effect of the recognition of the warranty obligation to the customer who purchased this merchandise on the Year 1 financial statements?
A) Option A
B) Option B
C) Option C
D) Option D
Correct Answer:
Verified
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