Nance Company estimates its annual warranty expense as 2% of annual net sales. The following data relate to the calendar year 2012: Net sales $1,500,000 Warranty liability account Balance, Dec. 31, 2012 $10,000 debit before adjustment Balance, Dec. 31, 2012 50,000 credit after adjustment Which one of the following entries was made to record the 2012 estimated warranty expense? Group of answer choices DR. Warranty Expense 30,000 CR. Retained Earnings (prior-period adjustment) 5,000 CR. Warranty Liability 25,000 DR. Warranty Expense 25,000 DR. Retained Earnings (prior-period adjustment) 5,000 CR. Warranty Liability 30,000 DR. Warranty Expense 20,000 CR. Warranty Liability 20,000 DR. Warranty Expense 30,000 CR. Warranty Liability 30,000
Nance Company estimates its annual warranty expense as 2% of annual net sales. The following data relate to the calendar year 2012: Net sales $1,500,000 Warranty liability account Balance, Dec. 31, 2012 $10,000 debit before adjustment Balance, Dec. 31, 2012 50,000 credit after adjustment Which one of the following entries was made to record the 2012 estimated warranty expense? Group of answer choices DR. Warranty Expense 30,000 CR. Retained Earnings (prior-period adjustment) 5,000 CR. Warranty Liability 25,000 DR. Warranty Expense 25,000 DR. Retained Earnings (prior-period adjustment) 5,000 CR. Warranty Liability 30,000 DR. Warranty Expense 20,000 CR. Warranty Liability 20,000 DR. Warranty Expense 30,000 CR. Warranty Liability 30,000
Cornerstones of Financial Accounting
4th Edition
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Jay Rich, Jeff Jones
Chapter8: Current And Contingent Liabilities
Section: Chapter Questions
Problem 57BE
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Question
Nance Company estimates its annual warranty expense as 2% of annual net sales. The following data relate to the calendar year 2012:
Net sales $1,500,000
Warranty liability account
Balance, Dec. 31, 2012 $10,000 debit before adjustment
Balance, Dec. 31, 2012 50,000 credit after adjustment
Which one of the following entries was made to record the 2012 estimated warranty expense?
Group of answer choices
DR. Warranty Expense 30,000 CR. Retained Earnings (prior-period adjustment) 5,000 CR. Warranty Liability 25,000
DR. Warranty Expense 25,000 DR. Retained Earnings (prior-period adjustment) 5,000 CR. Warranty Liability 30,000
DR. Warranty Expense 20,000 CR. Warranty Liability 20,000
DR. Warranty Expense 30,000 CR. Warranty Liability 30,000
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