On December 31,2015,estimated Warranty Payable Is Reported on the Balance
On December 31,2015,Estimated Warranty Payable is reported on the balance sheet for White Decker Company.The liability pertains to products sold in 2015 with five year warranties.How should the Estimated Warranty Payable be reported on the balance sheet at December 31,2015?
B)a long-term liability only.
C)a current liability only.
D)a current liability and a long-term liability.
The accounting principle that requires a company to record warranty expense in the same period that it records sales revenue is the:
A)going concern principle.
B)expense recognition principle.
Madison Bank lends Neenah Paper Company $100,000 on January 1,2014.Neenah Paper Company signs a $100,000,8%,6-month note.The journal entry made by Neenah Paper Company on January 1,2014 is:
A)debit Cash for $92,000 and credit Note Payable for $92,000.
B)debit Interest Expense for $8,000 and credit Cash for $8,000.
C)debit Cash for $100,000 and credit Notes Payable for $100,000.
D)debit Interest Expense for $8,000 and credit Interest Payable for $8,000.
Monthly sales are $500,000.Warranty costs are estimated at 4% of monthly sales.Warranties are honored with replacement products.No defective products are returned during the month.At the end of the month,the company should record a journal entry with a credit to:
A)Estimated Warranty Payable for $20,000.
B)Warranty Expense for $20,000.
C)Sales for $20,000.
D)Inventory for $20,000.