entry to record the warranty liability

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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Prairie Company had sales of $1,000,000. Estimated warranty costs are 1% of sales. Work performed under warranties during the period actually cost $8,750. The entry to record the warranty liability includes:


a debit to Warranty Expense for $10,000.

a debit to Warranty Expense for $8,750.

none of these

a debit to Warranty Expense for $1,250.

a debit to Warranty Expense for $18,750.

 

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