During June, Vixen Company Sells $850,000 in Merchandise That Has

Multiple Choice

During June, Vixen Company sells $850,000 in merchandise that has a one year warranty. Experience shows that warranty expenses average about 3% of the selling price. Customers returned $14,000 of merchandise for warranty replacement during the month.
- The entry to settle the customer warranties is:

A) Debit Warranty Expense $11,500; credit Estimated Warranty Liability $11,500.
B) Debit Estimated Warranty Liability $14,000; credit Merchandise Inventory $14,000.
C) Debit Estimated Warranty Liability $11,500; credit Merchandise Inventory $11,500.
D) Debit Warranty Expense $14,000; credit Estimated Warranty Liability $14,000.
E) Debit Estimated Warranty Liability $25,500; credit Warranty Expense $25,500.