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TEA [102]
3 years ago
14

White Hat​ Digital, Inc. starts the year with a credit balance of $3,400 in its Estimated Warranty Payable account. During the​y

ear, there were $225,000 in sales and $$5,400 in warranty repair payments. White Hat Digital estimates warranty expense at 2​% of sales.At the end of the​ year, what is the balance in the Estimated Warranty Payable​ account?
A.$2,500

B.$4,500

C.$3,400

D.$5,400
Business
1 answer:
Firlakuza [10]3 years ago
3 0

Answer:

A.$2,500

Explanation:

Initial balance of Estimated Warranty Payable account = $3,400

(Credit) Estimated warranty expense = $225,000 x 2% = $4,500

(Debit) Actual warranty repair payments = $5,400

Final balance = initial balance + credit - debit

Final balance = $3,400 + $4,500 -$5,400 = $2,500

At the end of the​ year, the balance in the Estimated Warranty Payable​ account is $2,500

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algol13

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