King Sales sells a certain product for $20,000. Included in this price is an implied service contract of $600. Fifty machines were sold in 2014. Warranty expense incurred during 2014 amounted to $35,000. The company uses the sales warranty accrual method. Which entry would probably not be made in 2014?
A) Unearned Warranty Revenue $\quad $35,000
Warranty Revenue $\quad $35,000

B) Cash $\quad $$\quad $1,000,000
Sales $\quad $$\quad $970,000
Unearned Warranty Revenue $\quad $$\quad $30,000

C) Cash $\quad $$\quad $30,000
Warranty Revenue $\quad $$\quad $30,000

D) Warranty Expense$\quad $$\quad $ 35,000
Cash $\quad $$\quad $$\quad $35,000

Question

King Sales sells a certain product for $20,000. Included in this price is an implied service contract of $600. Fifty machines were sold in 2014. Warranty expense incurred during 2014 amounted to $35,000. The company uses the sales warranty accrual method. Which entry would probably not be made in 2014?
A) Unearned Warranty Revenue $\quad $35,000
 Warranty Revenue $\quad $35,000

B) Cash $\quad $$\quad $1,000,000
 Sales $\quad $$\quad $970,000
Unearned Warranty Revenue $\quad $$\quad $30,000

C) Cash $\quad $$\quad $30,000
 Warranty Revenue $\quad $$\quad $30,000

D) Warranty Expense$\quad $$\quad $ 35,000
 Cash $\quad $$\quad $$\quad $35,000

Quizplus · Accepted Answer

The entry in option C is unlikely because it records cash received for warranty revenue, which is not typical under the sales warranty accrual method. Warranty revenue is usually recognized over time as the service is provided, not as cash is received.

King Sales Sells a Certain Product for $20,000 \quad 35,000 Warranty Revenue

King Sales Sells a Certain Product for $20,000 $\quad$ 35,000
Warranty Revenue