Table 11-13
Arc Digital starts the year with balances in its Estimated warranty payable account and Warranty expense account as shown below. During the year, there were $190,000 of sales and $3,200 of warranty repair payments. Arc Digital estimates warranty expense at 1.5% of sales.
-Refer to Table 11-13. At the end of the year, what was the balance in the estimated warranty payable account?
A)$2,850 debit
B)$1,050 credit
C)$3,200 debit
D)$1,420 debit

Question

Table 11-13
Arc Digital starts the year with balances in its Estimated warranty payable account and Warranty expense account as shown below. During the year, there were $190,000 of sales and $3,200 of warranty repair payments. Arc Digital estimates warranty expense at 1.5% of sales. 
-Refer to Table 11-13. At the end of the year, what was the balance in the estimated warranty payable account?
A)$2,850 debit 
B)$1,050 credit 
C)$3,200 debit 
D)$1,420 debit

Quizplus · Accepted Answer

The balance in the estimated warranty payable account is a credit of $1,050. This is calculated by adding the beginning balance of the account ($2,000 credit) to the current year's warranty expense ($3,050), and then subtracting the actual expenditures for warranties during the year ($4,000). This results in a credit balance of $1,050.

Table 11-13 Arc Digital Starts the Year with Balances in Its Estimated