Which journal entry would probably be made if the modified cash basis of accounting for warranties is in use for a sale made in 2014?
A) 2014
Warranty Expense $\quad $$\quad $$\quad $$\quad $XX
Estimated Liability under Warranties$\quad $ XX

B) 2015
Estimated Liability under Warranties $\quad $$\quad $XX
Cash $\quad $$\quad $$\quad $$\quad $$\quad $XX

C) 2014
Cash $\quad $$\quad $XX
Sales $\quad $$\quad $XX
Unearned Warranty Revenue $\quad $XX

D) 2015
Warranty Expense $\quad $$\quad $XX
Cash$\quad $$\quad $$\quad $ XX

Question

Which journal entry would probably be made if the modified cash basis of accounting for warranties is in use for a sale made in 2014?
A) 2014
 Warranty Expense $\quad $$\quad $$\quad $$\quad $XX
Estimated Liability under Warranties$\quad $ XX

B) 2015 
Estimated Liability under Warranties $\quad $$\quad $XX
Cash $\quad $$\quad $$\quad $$\quad $$\quad $XX

C) 2014
 Cash $\quad $$\quad $XX
Sales $\quad $$\quad $XX
Unearned Warranty Revenue $\quad $XX

D) 2015
 Warranty Expense $\quad $$\quad $XX
Cash$\quad $$\quad $$\quad $ XX

Quizplus · Accepted Answer

Under the modified cash basis, warranty expenses are recognized when cash is paid, not when the sale is made. Thus, in 2015, when the warranty is serviced, the expense is recorded.

Which Journal Entry Would Probably Be Made If the Modified \quad

Which Journal Entry Would Probably Be Made If the Modified $\quad$