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Question
A company sold $12,000 worth of bicycles with an extended warranty. It estimates that 2% of these sales will result in warranty work. The current period's entry to record the warranty expense is:A.Debit Warranty Expense $240; credit Cash $240.
B.Debit Prepaid Warranties $240; credit Warranty Expense $240.
C.Debit Estimated Warranty Liability $240; credit Cash $240.
D.Debit Sales Allowances $240; credit Estimated Warranty Liability $240.
E.Debit Warranty Expense $240; credit Estimated Warranty Liability $240.
Answer
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