During December, Vixen Company sells $869,000 in merchandise that has a one-year warranty. Warranty expense is estimated at 3% of sales. On January 5 of the following year, the merchandise requires repairs that are completed the same day. The repairs cost $15,900 for materials taken from parts inventory. The entry to record the repairs that occur on January 5 is: O Debit Estimated Warranty Liability $10,170; credit Parts Inventory $10,170. O Debit Estimated Warranty Liability $26,070; credit Warranty Expense $26,070. Debit Warranty Expense $15,900; credit Estimated Warranty Liability $15,900. O Debit Estimated Warranty Liability $15,900; credit Parts Inventory $15,900. Debit Warranty Expense $10,170; credit Estimated Warranty Liability $10,170.
During December, Vixen Company sells $869,000 in merchandise that has a one-year warranty. Warranty expense is estimated at 3% of sales. On January 5 of the following year, the merchandise requires repairs that are completed the same day. The repairs cost $15,900 for materials taken from parts inventory. The entry to record the repairs that occur on January 5 is: O Debit Estimated Warranty Liability $10,170; credit Parts Inventory $10,170. O Debit Estimated Warranty Liability $26,070; credit Warranty Expense $26,070. Debit Warranty Expense $15,900; credit Estimated Warranty Liability $15,900. O Debit Estimated Warranty Liability $15,900; credit Parts Inventory $15,900. Debit Warranty Expense $10,170; credit Estimated Warranty Liability $10,170.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:During December, Vixen Company sells $869,000 in merchandise that has a one-year
warranty. Warranty expense is estimated at 3% of sales. On January 5 of the following year,
the merchandise requires repairs that are completed the same day. The repairs cost $15,900
for materials taken from parts inventory. The entry to record the repairs that occur on January
5 is:
O Debit Estimated Warranty Liability $10,170; credit Parts Inventory $10,170.
O Debit Estimated Warranty Liability $26,070; credit Warranty Expense $26,070.
Debit Warranty Expense $15,900; credit Estimated Warranty Liability $15,900.
O Debit Estimated Warranty Liability $15,900; credit Parts Inventory $15,900.
Debit Warranty Expense $10,170; credit Estimated Warranty Liability $10,170.
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