Question

During August, Boxer Company sells $356,000 in merchandise that has a one year warranty. Experience shows that warranty expenses average about 5% of the selling price. The warranty liability account has a credit balance of $12,800 before adjustment. Customers returned merchandise for warranty repairs during the month that used $9,400 in parts for repairs. The entry to record the customer warranty repairs is:
A.Debit Warranty Expense $17,800; credit Estimated Warranty Liability $17,800.
B.Debit Warranty Expense $9,400; credit Estimated Warranty Liability $9,400.
C.Debit Warranty Expense $14,400; credit Estimated Warranty Liability $14,400.
D.Debit Estimated Warranty Liability $9,400; credit Parts Inventory $9,400.
E.Debit Estimated Warranty Liability $17,800; credit Parts Inventory $17,800.

Answer

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