CarBiz, Inc. manufactures and sells custom lift kits that include an assurance-type warranty for the first 90
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CarBiz, Inc. manufactures and sells custom lift kits that include an assurance-type warranty for the first 90 days. CarBiz also offers an optional extended coverage plan under which it will repair or replace any defective part for 2 years beyond the expiration of the assurance-type warranty. The total transaction price for the sale of the lift kits and the extended warranty is $6,200. The standalone price of each is $5,300 and $900, respectively. The estimated cost of the assurance-warranty is $450. The accounting for warranty will include
a. debit to Warranty Expense, $900
b. credit to Sales Revenue, $6,200
c. credit to Unearned Warranty Revenue, $450
d. debit to Warranty Expense, $450
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