Buffalo,Inc.reported sales revenue for 2017 of $911,000.The products were sold with a nine-month warranty.Members of Buffalo's management estimate that the cost of the warranty will be equal to 9% of sales revenue.Which of the following will be included in the entry to record the actual amounts paid out as a result of warranty claims?
A)a debit to Estimated Warranty Payable for the actual amount of payments
B)a credit to Estimated Warranty Payable for $81,990
C)a debit to Estimated Warranty Payable for $81,990
D)a debit to Warranty Expense for the actual amount of payments

Question

Quizplus · Accepted Answer

When actual warranty claims are paid, the Estimated Warranty Payable account is debited to reduce the liability, reflecting the actual payments made.