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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.

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Mariano Corporation sells 10,000 units of inventory during the first year of operations for $500 each. The selling price includes a one-year warranty on parts. It is estimated that 3% of the units will be defective and that repair costs are estimated to be $50 per unit. In the year of sale, warranty contracts are honored on 80 units for a total cost of $4,000. What amount will be reported as Estimated Warranty Liability at the end of the year?

A.$4,000
B.$6,000
C.$11,000
D.$15,000

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Michigan Bank lends Detroit Furniture Company $100,000 on December 1. Detroit Furniture Company signs a $100,000, 12%, 4-month note. The total cash paid for interest (only) at maturity of the note is:

A.$1,000.
B.$2,000.
C.$3,000.
D.$4,000

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The journal entry to record accrued interest on a short-term note payable must include a debit to:

A.Interest Payable and a credit to Cash.
B.Interest Expense and a credit to Cash.
C.Interest Expense and a credit to Interest Payable.
D.Interest Payable and a credit to Notes Payable.

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Kathy's Corner Store has total cash sales for the month of $36,000 excluding sales taxes. If the sales tax rate is 5%, what journal entry is needed? (Ignore Cost of Goods Sold.)

A.debit Cash $37,800, credit Sales $37,800
B.debit Cash $36,000 and credit Sales $36,000
C.debit Cash $34,200, debit Sales Tax Receivable for $1,800 and credit Sales for $36,000
D.debit Cash $37,800, credit Sales $36,000 and credit Sales Tax Payable $1,800

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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.

Michigan Bank lends Detroit Furniture Company $100,000 on December 1. Detroit Furniture Company signs a $100,000, 12%, 4-month note. The total cash paid for interest (only) at maturity of the note is:

The journal entry to record accrued interest on a short-term note payable must include a debit to:

Kathy's Corner Store has total cash sales for the month of $36,000 excluding sales taxes. If the sales tax rate is 5%, what journal entry is needed? (Ignore Cost of Goods Sold.)

A.Estimated Warranty Payable for $20,000.
B.Warranty Expense for $20,000.
C.Sales for $20,000.
D.Inventory for $20,000.