Timeless Ltd produces clocks and sells them with a one-year warranty. The warranty provision account currently has a debit balance of $4,000. The estimated cost of repairing clocks that have already been sold is $18,000. The adjustment needed to update the warranty provision account is:
A) debit $18,000.
B) credit $18,000.
C) debit $22,000.
D) credit $22,000.

Question

Quizplus · Accepted Answer

The warranty provision must be increased to $18,000. As provision accounts normally have a credit balance, a credit entry for $22,000 is required.

Timeless Ltd Produces Clocks and Sells Them with a One-Year