During Year 1, its first year of operations, Benitez Company reported sales of $360,000. At the end of Year 1, the company estimated its warranty obligation at 2% of sales. During Year 1, the company paid $4,800 cash to settle warranty claims. Which of the following statements is true? Multiple Choice All of these answer choices are correct. Warranty expenses would decrease net earnings by $7,200 in Year 1. The warranties payable account has a balance of $2,400 at the end of Year 1.
During Year 1, its first year of operations, Benitez Company reported sales of $360,000. At the end of Year 1, the company estimated its warranty obligation at 2% of sales. During Year 1, the company paid $4,800 cash to settle warranty claims. Which of the following statements is true? Multiple Choice All of these answer choices are correct. Warranty expenses would decrease net earnings by $7,200 in Year 1. The warranties payable account has a balance of $2,400 at the end of Year 1.
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter6: Cash And Receivables
Section: Chapter Questions
Problem 10RE: On December 1 of the current year, Jordan Inc. assigns 125,000 of its accounts receivable to...
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