J Limited manufactures and sells cross body handbags with a 1-year warranty. The Warranty Provision account had
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Question:
J Limited manufactures and sells cross body handbags with a 1-year warranty. The Warranty Provision account had a debit balance of $36,000 before adjusting entries on 31 December 2020. It is estimated that for the 2021 financial year, the estimated cost of servicing outstanding warranties will be $180,000. For the 31 December 2020 adjusting journal entry:
(a) The warranty provision account will be credited by $180,000.
(b) Warranty provision of $36,000 will be credited.
(c) The warranty provision account will be credited by $216,000.
(d) Warranty expense of $180,000 will be debited.
Related Book For
Fundamental Accounting Principles
ISBN: 978-0078110870
20th Edition
Authors: John J. Wild, Ken W. Shaw, Barbara Chiappetta
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