Scout Company sold $15.000 of merchandise in September with a three-month warranty. The cost to repair defects under warranty is estimated at 5% of the sales price. The journal entry to record the estimated warranty expense for the month of September will include a

a. debit to Product Warranty Expense for $750

b. credit to Product Warranty Expense for $750.

c. debit to Product Warranty Payable for $7,500.

d. credit to Product Warranty Payable for $7.500.

Question

Business

Haley Mullins

29 December, 01:10

Scout Company sold $15.000 of merchandise in September with a three-month warranty. The cost to repair defects under warranty is estimated at 5% of the sales price. The journal entry to record the estimated warranty expense for the month of September will include a

a. debit to Product Warranty Expense for $750

b. credit to Product Warranty Expense for $750.

c. debit to Product Warranty Payable for $7,500.

d. credit to Product Warranty Payable for $7.500.

+1

Answers (1)

Know the Answer?

Mary Atkinson · Answer 1

Answer: debit to Product Warranty Expense for $750

Explanation: 5% of $15000 =

5 : 100 * $15000 is $750.

This is an expense and so will be a debit.