During May, Claremore sold 500 portable CD players for $50 each. Each CD player cost Claremore $25 to purchase and carried a one-year warranty. If 10 percent typically need to be replaced over the warranty period, what amount should Claremore debit Product Warranty Expense for in May?

Question

Quizplus · Accepted Answer

Claremore should debit Product Warranty Expense for the cost of replacing 10% of the 500 CD players sold. The cost to replace each CD player is $25, so the calculation is 500 * 10% * $25 = $1,250.

During May, Claremore Sold 500 Portable CD Players for $50