The Clarion Company Provides a One-Year Warranty on All Merchandise

Short Answer

The Clarion Company provides a one-year warranty on all merchandise it sells.In 2016,the company recorded sales of $500,000.It estimated that the warranty costs on these sales would amount to $2,000.In July 2017,Clarion paid $250 to satisfy a warranty claim.Indicate whether each of the following statements is true or false.
_____ a)Clarion's adjusting entry recording the warranty at the end of 2016 reduced total assets and total equity.
_____ b)Clarion's adjusting entry recording the warranties at the end of 2016 increased Clarion's total liabilities.
_____ c)The July 2017 entry reduced total assets and net income for 2017.
_____ d)The July 2017 entry reduced Clarion's total liabilities.
_____ e)The adjusting entry recorded at the end of 2016 did not affect Clarion's revenue for the year.