What is the correct choice? as Inc. sold goods with a seling price ofs o m 2019

Question

What is the correct choice?

as Inc. sold goods with a seling price ofs o m 2019 and estimated 5% warranty expense for the year Customers complar ed of defects, and goods with a va cost of $1,500 had to be repiaced. Which of the tollowing is the correct ounal entey for hanoring the warranties with goods? O A. Estimated Warranty Payable ??. Estimated warranty Payable O c. Warranty Expense O D. Estimated Warranty Payable 1,500 Cash 1,500 1,500 1,500 Warranty Expense Merchandise Inventory Merchandise Inventory 1,500 1,500 1,500 1,500

Explanation / Answer

Journal entry for honoring the warranties with goods:

Date

Accounts

Debit

Credit

30/12/2019

Estimated Warranty Payable

1,500

      Merchandise Inventory

1,500

Hence option “D” is correct answer.

Date

Accounts

Debit

Credit

30/12/2019

Estimated Warranty Payable

1,500

      Merchandise Inventory

1,500

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