Biology Forums - Study Force

Franconia Sales offers warranties on all their electronic goods.  Warranty expense is estimated at 2% of sales revenue.  In 2013, Franconia had $500,000 of sales.  In the same year, Franconia paid out $7,500 of warranty payments.  Which of the following is the entry needed to record the disbursement of warranty payments?
A)
Estimated warranty payable   7,500   
    Cash      7,500

B)
Warranty expense   7,500   
    Estimated warranty payable      7,500

C)
Warranty expense   10,000   
    Estimated warranty payable      10,000

D)
Warranty expense   10,000   
    Sales revenue      10,000

Content hidden