Cycle Sales Company offers warranties on all their bikes.They estimate warranty expense at 3.5% of sales.At the beginning of 2019,the Estimated Warranty Payable account had a credit balance of $1400.During the year,Cycle Sales had $299,000 in sales and had to pay out $5900 in warranty payments.How much Warranty Expense will be reported on the 2019 income statement?

Question

Quizplus · Accepted Answer

The Answer of Cycle Sales Company offers warranties on all their bikes.They estimate warranty expense at 3.5% of sales.At the beginning of 2019,the Estimated Warranty Payable account had a credit balance of $1400.During the year,Cycle Sales had $299,000 in sales and had to pay out $5900 in warranty payments.How much Warranty Expense will be reported on the 2019 income statement?

Cycle Sales Company Offers Warranties on All Their Bikes