A company sold 10,000 TVs in July and estimates warranty expense for these TVs to be $25,000.

Question:

A company sold 10,000 TVs in July and estimates warranty expense for these TVs to be $25,000. During July, 80 TVs were serviced under warranty at a cost of $18,000. The credit balance in the Estimated Warranty Liability account at July 1 was $26,000.
What is the company’s warranty expense for the month of July?

a. $51,000

b. $1,000

c. $25,000

d. $33,000

e. $18,000

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