Product A comes with a three year warranty when purchased by customers. The estimated warranty costs as a percentage of dollar sales are 3% in the year of sale, 2% in the second year after the sale and 1% in the third year after the sale. The following information relates to sales and warranty expenditures of Product A Actual warranty expenditures Year Year 1 Year 2 Year 3 Sales $400,000 $ 10,000 $500,000 $350,000 $ 35,000 $ 22,000 Which of the following is NOT part of the required journal entry in Year 1 based on the above information?

Product A comes with a three year warranty when purchased by customers. The estimated warranty costs as a percentage of dollar sales are 3% in the year of sale, 2% in the second year after the sale and 1% in the third year after the sale. The following information relates to sales and warranty expenditures of Product A Actual warranty expenditures Year Year 1 Year 2 Year 3 Sales $400,000 $ 10,000 $500,000 $350,000 $ 35,000 $ 22,000 Which of the following is NOT part of the required journal entry in Year 1 based on the above information?

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 9.11E

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