The journal entry a company uses to record the estimated accrued product warranty liability is
A) debit Product Warranty Expense; credit Product Warranty Payable
B) debit Product Warranty Payable; credit Cash
C) debit Product Warranty Expense; credit Cash
D) debit Product Warranty Payable; credit Product Warranty Expense

Question

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The estimated accrued product warranty liability is an expense that the company has incurred but has not yet paid. Therefore, the company needs to record the expense and create a liability on its financial statements. The journal entry to record this would be to debit Product Warranty Expense (an expense account) and credit Product Warranty Payable (a liability account). This option is reflected in choice letter A. The other options either do not account for both the expense and liability or have incorrect account titles.

The Journal Entry a Company Uses to Record the Estimated