4. Holland Company estimates its annual warranty expense as 3% of annual net sales. The following data relate to the calendar year 2018: $1,500,000 Balance, Dec. 31, 2018 $10,000 debit before adjustment 20,000 credit after adjustment Which one of the following entries was made to record the 2018 estimated warranty expense? A) Warranty Expense 45,000 Net sales. Warranty liability account Balance, Dec. 31, 2018 Retained Earnings (prior-period adjustment) Warranty Liability B) Warranty Expense Retained Earnings (prior-period adjustment) Warranty Liability C) D) Warranty Expense Warranty Expense Warranty Liability Warranty Liability 25,000 5,000 30,000 45,000 7,500 37,500 45,000 30,000 45,000
4. Holland Company estimates its annual warranty expense as 3% of annual net sales. The following data relate to the calendar year 2018: $1,500,000 Balance, Dec. 31, 2018 $10,000 debit before adjustment 20,000 credit after adjustment Which one of the following entries was made to record the 2018 estimated warranty expense? A) Warranty Expense 45,000 Net sales. Warranty liability account Balance, Dec. 31, 2018 Retained Earnings (prior-period adjustment) Warranty Liability B) Warranty Expense Retained Earnings (prior-period adjustment) Warranty Liability C) D) Warranty Expense Warranty Expense Warranty Liability Warranty Liability 25,000 5,000 30,000 45,000 7,500 37,500 45,000 30,000 45,000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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tekabhai
Transcribed Image Text:4. Holland Company estimates its annual warranty expense as 3% of annual net sales. The
following data relate to the calendar year 2018:
Net sales
$1,500,000
Warranty liability account
Balance, Dec. 31, 2018
Balance, Dec. 31, 2018
$10,000 debit before adjustment
20,000 credit after adjustment
Which one of the following entries was made to record the 2018 estimated warranty
expense?
A) Warranty Expense
45,000
Retained Earnings (prior-period adjustment)
Warranty Liability
B) Warranty Expense
Retained Earnings (prior-period adjustment)
Warranty Liability
C)
D) Warranty Expense
Warranty Expense
Warranty Liability
Warranty Liability
25,000
5,000
30,000
45,000
7,500
37,500
45,000
30,000
45,000
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