During the month, Inline Industries paid $582 to settle warranty claims. Inline uses an estimated warranty account. The journal entry to record the payment would have been: A. debit Warranty expense, $582; credit Cash, $582. B. debit Warranty expense, $582; credit Estimated Warranty payable, $582 C. debit Estimated warranty payable, $582; credit Warranty expense, $582 D. debit Estimated warranty payable, $582, credit Cash, $582
Depreciation Methods
The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.
Depreciation Accounting
In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.
During the month, Inline Industries paid $582 to settle warranty claims. Inline uses an estimated warranty account. The
- A. debit Warranty expense, $582; credit Cash, $582.
- B. debit Warranty expense, $582; credit Estimated Warranty payable, $582
- C. debit Estimated warranty payable, $582; credit Warranty expense, $582
- D. debit Estimated warranty payable, $582, credit Cash, $582
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