Product A comes with a two year warranty when purchased by customers. The estimated warranty costs as a percentage of dollar sales are 3% in the year of sale and 5% in the second year after the sale. The following information relates to sales and warranty expenditures of Product A Actual warranty expenditures $ 10,000 $ 35,000 Year Year 1 Year 2 Sales $400,000 $500,000 Which of the following is NOT part of the required journal entry in Year 1 based on the above information? Multiple Choice Credit cash $10,000 Debit warranty expense $12,000 None of the other alternatives are correct Debit warranty expense $32,000 Credit sales $400,000
Product A comes with a two year warranty when purchased by customers. The estimated warranty costs as a percentage of dollar sales are 3% in the year of sale and 5% in the second year after the sale. The following information relates to sales and warranty expenditures of Product A Actual warranty expenditures $ 10,000 $ 35,000 Year Year 1 Year 2 Sales $400,000 $500,000 Which of the following is NOT part of the required journal entry in Year 1 based on the above information? Multiple Choice Credit cash $10,000 Debit warranty expense $12,000 None of the other alternatives are correct Debit warranty expense $32,000 Credit sales $400,000
Financial Accounting: The Impact on Decision Makers
10th Edition
ISBN:9781305654174
Author:Gary A. Porter, Curtis L. Norton
Publisher:Gary A. Porter, Curtis L. Norton
Chapter9: Current Liabilities, Contingencies, And The Time Value Of Money
Section: Chapter Questions
Problem 9.11E
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![Product A comes with a two year warranty when purchased by customers. The estimated warranty costs as a percentage of dollar sales are 3% in the year of sale and 5% in the second year after the sale.
The following information relates to sales and warranty expenditures of Product A
Actual warranty
expenditures
$ 10,000
$ 35,000
Year
Year 1
Year 2
Sales
$400,000
$500,000
Which of the following is NOT part of the required journal entry in Year 1 based on the above information?
Multiple Choice
Credit cash $10,000
Debit warranty expense $12,000
None of the other alternatives are correct
Debit warranty expense $32,000
Credit sales $400,000](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Ff306cc40-e923-45cf-9958-762e2dd45c28%2Fd2c1d67e-2293-4542-8523-94293eeb0345%2F97t1et_processed.png&w=3840&q=75)
Transcribed Image Text:Product A comes with a two year warranty when purchased by customers. The estimated warranty costs as a percentage of dollar sales are 3% in the year of sale and 5% in the second year after the sale.
The following information relates to sales and warranty expenditures of Product A
Actual warranty
expenditures
$ 10,000
$ 35,000
Year
Year 1
Year 2
Sales
$400,000
$500,000
Which of the following is NOT part of the required journal entry in Year 1 based on the above information?
Multiple Choice
Credit cash $10,000
Debit warranty expense $12,000
None of the other alternatives are correct
Debit warranty expense $32,000
Credit sales $400,000
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