Reference no: EM132617620

Problem 1: he beginning balance in the Warranty Payable account was $50,000. Sales were $900,000 and warranty costs were estimated at 7% of sales. During the year, $55,000 was paid to settle warranty claims. As a result of these transactions, what is the amount of warranty expense for the year and what is the ending balance in Warranty Payable?

            Warranty Expense   Warranty Payable

Option 1: $50,000                       $63,000

Option 2: $63,000                       $58,000

Option 3: $55,000                        $63,000

Option 4: $113,000                    $58,000

Option 5: None of the above.