Platinum Corp

Multiple Choice

Platinum Corp. uses the expense approach to account for warranties. They sell a used car for $ 30,000 on Oct 25, 2020, with a one-year warranty covering parts and labour. Warranty expense is estimated at 2% of the selling price, and the appropriate adjusting entry is recorded at Dec 31, 2020. On March 12, 2021, the car is returned for warranty repairs. This cost Platinum $ 200 in parts and $ 120 in labour. When recording the March 12, 2021 transaction, Platinum would debit Warranty Expense with

A) zero.
B) $ 120.
C) $ 200.
D) $ 320.