Use the Information Below to Answer the Following Questions:
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Use the information below to answer the following questions:
On 30 June 2012, Video Manufactures Ltd, which uses accrual accounting, estimates that it will incur warranty costs of $24 000 in the next financial year on products sold during the year just ended. On 7 October 2012, the manufacturer pays $3500 under the warranty.
-What is the journal entry made by Video Manufactures Ltd on 7 October 2012?

A) DR Warranty expense $\quad$$\quad$ CR Warranty liability
B) DR Warranty liability $\quad$$\quad$ CR Warranty expense
C) DR Warranty liability $\quad$$\quad$ CR Cash
D) DR Cash $\quad$$\quad$$\quad$$\quad$$\quad$$\quad$ CR Warranty liability