During 2017, Alaa Company sold 600 TV for $500 each. The sold items include a one-year warranty. The manager estimated that 5% of these TVs will be defective and the warranty repair cost is $40 per TV. In 2017, Alaa honors warranty contracts for 12 TVs. During the first month of 2018, the company honors warranty contracts for 3 TVs. The adjusting entry to accrue the estimated warranty costs is: * Debit Warranty Expense $15,000 Credit Warranty Liability $15,000 Debit Warranty Expense $1,200 Credit Warranty Liability $1,200 Debit Warranty Liability $1,200 Credit Warranty Expense $1,200 Debit Warranty Liability $480 Credit Cash $480 None of the above

During 2017, Alaa Company sold 600 TV for $500 each. The sold items include a one-year warranty. The manager estimated that 5% of these TVs will be defective and the warranty repair cost is $40 per TV. In 2017, Alaa honors warranty contracts for 12 TVs. During the first month of 2018, the company honors warranty contracts for 3 TVs. The adjusting entry to accrue the estimated warranty costs is: * Debit Warranty Expense $15,000 Credit Warranty Liability $15,000 Debit Warranty Expense $1,200 Credit Warranty Liability $1,200 Debit Warranty Liability $1,200 Credit Warranty Expense $1,200 Debit Warranty Liability $480 Credit Cash $480 None of the above

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 9.4P

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