Help me selecting the right answer. Thank you **Warranty Accounting for Rambler, Inc.**In the fiscal year 2025, Rambler, Inc. reported sales revenue amounting to $918,000. The company provided a nine-month warranty on its products. Management of Rambler, Inc. estimated that the warranty costs would correspond to 14% of the total sales revenue. The key accounting question is: What journal entry should be made to record the actual amounts disbursed as a result of warranty claims?### Options:1. **Debit Estimated Warranty Payable for $128,520** This option involves debiting the liability account, decreasing it by the estimated warranty costs.2. **Debit to Warranty Expense for the Actual Amount of Payments** This option suggests recording the real expense incurred as payments for warranty claims.3. **Credit to Estimated Warranty Payable for $128,520** This choice involves increasing the warranty payable account balance by the estimated amount.4. **Debit to Estimated Warranty Payable for the Actual Amount of Payments** This option proposes reducing the warranty payable by the actual payments made, not the estimated amount.Understanding these options is crucial for accurately reflecting warranty-related transactions in financial statements.

Warranty expense payable is made as a provision at estimated basis which is 14% in this question. At…

Rambler, Inc. reported sales revenue for 2025 of $918,000. The products were sold with a nine-month warranty. Members of Rambler's management estimate that the cost of the warranty will be equal to 14% of sales revenue. Which of the following will be included in the entry to record the actual amounts paid out as a result of warranty claims? O a debit to Estimated Warranty Payable for $128,520 O a debit to Warranty Expense for the actual amount of payments O a credit to Estimated Warranty Payable for $128,520 O a debit to Estimated Warranty Payable for the actual amount of payments

Rambler, Inc. reported sales revenue for 2025 of $918,000. The products were sold with a nine-month warranty. Members of Rambler's management estimate that the cost of the warranty will be equal to 14% of sales revenue. Which of the following will be included in the entry to record the actual amounts paid out as a result of warranty claims? O a debit to Estimated Warranty Payable for $128,520 O a debit to Warranty Expense for the actual amount of payments O a credit to Estimated Warranty Payable for $128,520 O a debit to Estimated Warranty Payable for the actual amount of payments

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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