Ragas, Inc. sold goods with a selling price of $50,000 in the 2017 and estimated

Question

Ragas, Inc. sold goods with a selling price of $50,000 in the 2017 and estimated 5% warranty expense for the year. Customers complained of defects, and goods with a cost of $1,500 had to be replaced. Which of the following is the correct journal entry for honoring the warranties with goods

.

Estimated Warranty Payable

1,500

Cash

1,500

B.

Estimated Warranty Payable

1,500

Warranty Expense

1,500

C.

Warranty Expense

1,500

Merchandise Inventory

1,500

D.

Estimated Warranty Payable

1,500

Merchandise Inventory

1,500

Estimated Warranty Payable

1,500

Cash

1,500

Explanation / Answer

Estimated Warranty Payable 1500        Merchandise Inventory 1500 Option D is correct

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