During the month. Evergreen Roofing settled S600 in warranty entry to record the

Question

During the month. Evergreen Roofing settled S600 in warranty entry to record the settled claims would have been daims by replacing the defective flashing Evergreen uses an estimated warranty account The journal O A. debit Estimated Warranty Payable $600, credit Inventory $600 O B. debit Warranty Expense $600, credit Estimated Warranty Payable $600 C. debit Warranty Expense S600, credit Cash $600 O D. debit Estimated Warranty Payable $600, credit Cash $600 Click to select your answer e here to search

Explanation / Answer

Answer is A. Estimated warranty Payable $ 600; Credit Inventory $ 600. Explanation: Warranty settled will reduce the warranty payable as it is standing as a liability during warranty period and as the replacement is made out of inventory, the inventory gets credited for reducing it.

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