Booker Company Reported Sales Revenue for 2007 of $800,000

Multiple Choice

Booker Company reported sales revenue for 2007 of $800,000. The products were sold with a six-month warranty. Members of Booker's management estimate the cost of the warranty will be equal to 3% of sales revenue. Which of the following is included in the entry to record the repair of a product under warranty?

A) A debit to Estimated warranty payable for $24,000
B) A credit to Estimated warranty payable when the products are repaired or replaced
C) A debit to Estimated warranty payable in 2007 for $24,000
D) A debit to Warranty expense of $24,000