ABC Company sells 300 machines for $5000 each in the current year. Each machine carries a one-year warranty. Experience from the sale of similar machines in the past show warranty costs will average $100 per machine. ABC Company spent $10,000 to fulfill warranty agreements in the current year. What is the journal entry to accrue the remainder of warranty costs in the current year?

Debit Warranty Expense and credit Warranty Payable for $10,000.

Debit Warranty Expense and credit Warranty Payable for $20,000.

Debit Warranty Payable and credit Warranty Expense for $10,000.

Debit Warranty Payable and credit Warranty Expense for $20,000.

Answer rating: 100% (QA)

option 2 is correct Debit warranty expenses ... View the full answer