During Year 1, its first year of operations, Benitez Co. reported sales of $360,000. At the end of Year 1, the company estimated its warranty obligation at2% of sales. During Year 1, the company paid $4,800 cash to settle warranty claims. Which of the following statements is true?Multiple ChoiceWarranty expenses would decrease net earnings by $7,200 in Year 1.All of these answer choices are correct.The warranties payable account has a balance of $2,400 at the end of Year 1.Cash decreased by $4,800 as a result of the accounting events associated with warranties in Year 1.

Income statement is a financial statement that shows profitability, total revenue and total expenses…

During Year 1, its first year of operations, Benitez Co. reported sales of $360,000. At the end of Year 1, the company estimated its warranty obligation at 2% of sales. During Year 1, the company paid $4,800 cash to settle warranty claims. Which of the following statements is true? Multiple Choice O O Warranty expenses would decrease net earnings by $7,200 in Year 1. All of these answer choices are correct. The warranties payable account has a balance of $2,400 at the end of Year 1. Cash decreased by $4,800 as a result of the accounting events associated with warranties in Year 1.

During Year 1, its first year of operations, Benitez Co. reported sales of $360,000. At the end of Year 1, the company estimated its warranty obligation at 2% of sales. During Year 1, the company paid $4,800 cash to settle warranty claims. Which of the following statements is true? Multiple Choice O O Warranty expenses would decrease net earnings by $7,200 in Year 1. All of these answer choices are correct. The warranties payable account has a balance of $2,400 at the end of Year 1. Cash decreased by $4,800 as a result of the accounting events associated with warranties in Year 1.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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